HEALTHCARE IS QUIETLY MOVING HIGHER -- INDIVIDUAL LEADERS ARE EDWARDS LIFESCIENCES, VARIAN MEDICAL, AND ABBVIE -- U.S. MEDICAL DEVICES ETF REPRESENTS THE STRONGEST PART OF HEALTHCARE -- BOSTON SCIENTIFIC IS ONE OF ITS LEADERS
HEALTH CARE SPDR NEARS RECORD HIGH... Although it hasn't received much attention lately, the healthcare sector is quietly moving higher. In fact, healthcare is the third strongest sector this year behind technology and consumer cyclicals. And its chart looks promising. Chart 1 shows the Health Care SPDR (XLV) rising back above its previous peaks formed in mid 2015 and mid 2016. That puts it within striking distance of an all-time high. And it's relatively cheap. The XLV/S&P 500 ratio (bottom of chart) shows the sector underperforming the market by a wide margin over the last two years. The green box, however, shows it starting to do better this year.
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Chart 1
EDWARDS LIFESCIENCES, VARIAN, AND ABBVIE ARE DAY'S LEADERS... Three of today's strongest healthcare stocks are shown below. Chart 2 shows Edwards Lifesciences (EW) gapping up to a six month high this week. EW is part of a strong medical supplies group (more on that shortly). Chart 3 shows medical equipment stock Varian Medical Systems (VAR) nearing a record high. Chart 3 shows biotech stock AbbVie (ABBV) on the verge of major bullish breakout.
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Chart 2
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Chart 3
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Chart 4
US MEDICAL DEVICES ETF IS HEALTHCARE LEADER... Medical equipment and supplies have been the strongest parts of the sector since the start of the year. Fortunately, there's an ETF that covers stocks in those groups. Chart 5 shows the U.S. Medical Devices ETF (IHI) surging to a new record high. It achieved a bullish breakout during February. And its relative strength line has been rising versus the S&P 500 all year. The ETF includes Edwards Lifesciences shown in Chart 2. It also includes strong performers like Thermo Fisher Scientific (TMO), Stryker (SYK), Boston Scientific (BSX), Baxter (BAX), and Waters Corp (WAT). Four of those stocks are trading at all-time highs. Boston Scientific has reached the highest level in more than ten years. Chart 6 shows BSX completing a couple of bullish breakouts over the past year which pushed it to the highest level since 2006. Its relative strength ratio (top of chart) has also been rising all year. [The IHI also includes Bard which surged 20% this week after being bought by Becton Dickinson].
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Chart 5
