NFTRH+; Healthcare (XLV) Trade Setup, Market Update

As you know, the favored plan is for the US stock indexes to finish bouncing at or below the top channel line parameters per yesterday’s NFTRH update (I’ve begun slowly adding to the short side).  But within this, there are some sectors that look constructive to continue bouncing in the short-term; Healthcare and Biotech among them.  Let’s focus on Healthcare for this update.

You may have noticed in NFTRH 374 that I took a shot with XLV, as a Healthcare ETF and that long holdings were the likes of DEPO (specialty pharma) and BSX (medical device).  I have added the speculative PTCT to these holdings (based on input from a fundamentals-based subscriber and a potential bottom/bounce chart pattern), which at the moment represent most of my non-mining long positions.

On XLV we see a very well defined point of lateral resistance.  XLV has bounced right to this resistance from the EMAs 50 and 20 and the SMA 50.  RSI is good and MACD looks sneaky in a bullish way.  Neither are anywhere near over bought.  The September and October highs were each 72.69.  A break and hold above that level would measure the pattern to 80, as hard to believe (for me, anyway) as it sounds.

xlv daily chart

For those interested in being long (whether in absolute terms or vs. short positioning) this seems like one of the better areas of the market.  Let’s see what the weekly chart has to say about it.

XLV broke down big time last summer but has since bounced back and ground around mostly sideways.  It is back in the former uptrend channel from 2012.  Again, RSI looks good and MACD, while negative, has that look about it I like (over sold, triggered up).  A bounce to the channel top would bring XLV to somewhere near the daily pattern’s measurement of 80.

xlv weekly chart

Buy Target:  Above 72 after a hold above the SMA 200 for 2-3 days if you want a firmer support scenario, or a hold of several days above 72.70 for even firmer support.

Sell Target:  Measurement is 80, and the weekly channel is there as well.  It seems improbable, given a bearish broad market view.  But these are the clues that the market gives along the way.  We can only read what the charts say and have open minded views.

Stop Loss:  A break below the moving average cluster around 71 (tight) or new recovery lows below 69 (more lenient).

Obviously, the above can be applied as a frame of reference to individually preferred vehicles within the Healthcare sector, whether other ETFs, leveraged ETFs or individual stocks.  Or just as a bit of macro market input to consider.

A reminder that chart based NFTRH+ updates are technical trade setup ideas, which may not be revisited as the buy, sell, stop parameters are already noted. They are meant as a starting point for further research if interested. I will not personally buy every item highlighted and will sometimes sell – without prior notice (because this takes time and resource away from NFTRH’s main functions) – any item that I do buy, below target, which is something I often do as a trader. Also please be aware that I am not a fundamental stock analyst. Due diligence is your responsibility.