HEALTHCARE IS DAY'S STRONGEST SECTOR -- AND MAY BE READY TO RESUME LEADERSHIP ROLE -- HEALTHCARE LEADERS ARE LAB CORP, QUEST DIAGNOSTICS AND PERKINELMER -- S&P 500 TESTS ITS JUNE HIGH -- WHILE THE DOW TRADES ABOVE ITS 200-DAY LINE
BUYING HEALTHCARE AGAIN... After taking a leadership role during March and April, healthcare stocks have essentially moved sideways over the last couple of months while the rest of the market has gained ground. The sector's recent underperformance can be seen by the falling XLV/SPX relative strength ratio in the upper box in Chart 1 which has been declining since the end of April. At the same time, the daily bars in Chart 1 show the Health Care SPDR (XLV) trending sideways over the past couple of months while remaining below their record highs set during the first quarter. That period of flat performance may be ending. The last daily bar shows the XLV gaining more than 2% today making it the day's strongest sector. And on a strong market day with most sectors in the green. And suggests that the XLV may be getting ready to challenge overhead resistance near its yearly highs. And resume a leadership role.
LAB CORP LEADS XLV HIGHER... The daily bars in Chart 2 show Laboratory Corp. of America (LH) surging nearly 6% today to lead the XLV higher. The stock appears headed for a challenge of its April/May highs. Its relative strength ratio in the upper box appears to be turning up as well. LH is the day's biggest percentage gainers in the XLV.
QUEST DIAGNOSTICS NEARS TEST OF OLD HIGH... Chart 3 shows Quest Diagnostics (DGX) gaining more than 5% today and nearing a test of its second quarter highs. Its relative strength ratio in the upper box is rising as well. Both stocks are health care providers which are leading the sector higher today.
PERKINELMER HITS NEW RECORD... Chart 4 shows Perkinelmer (PKI) breaking out to a record high today. Its relative strength ratio in the upper box is rising as well. That leader is in medical supplies.
STOCK INDEXES HAVE STRONG DAY... Stocks are off to a strong start to the week. The Nasdaq hit a new record but is losing ground. Chart 5 shows the S&P 500 Index challenging its June intra-day peak at 3233. A close above that level would put the SPX at the highest level since February. Chart 6 show the Dow Industrials trying to close above their 200-day average for the first time in a month. Ten of the market's eleven sectors are gaining today with healthcare, industrials, financials, materials, and consumer cylclicals in the lead. Real estate is the only sector in the red. For a change, technology and communication stocks are lagging. That may be a sign that investors are rotating into other sectors that may be ready to show some leadership. Like healthcare.
