As you know, we follow the Medical Device iShares (IHI) on a weekly basis and have noted its over bought status for some time now. Not so anymore. Apparently, the momentum chasers have been taken out and IHI is making a test of the daily SMA 200 (yet still at a higher low to June). It’s over sold and due for a bounce. A reasonable bounce target would be 138.
Here is the middle panel of the multi-ETF weekly chart we show in NFTRH, which also includes Energy (XLE) and general Healthcare (XLV). As you can see, IHI has fully repaired the over bought status too far above the EMA 50 on the weekly view.
Now for the caveats. I think that the market can bounce here, but may have lower to go for a real (as in scary) test of major support. The election will surely figure into this one way or another. So understand that before considering this trade. The green shaded support on the weekly chart shows where a major test would be for IHI.
So you can look at this three ways; ignore it all together, try it for a bounce here or wait to get a real opportunity in the low 120’s. For my part, I am not buying it but have instead bought medical device plays CYNO (as noted in NFTRH 419), CRY (as highlighted in NFTRH 419) and today, BSX, on which I had previously been long and then short. This is not a call to any sort of action but rather, a look ahead on one of my favored sectors for your consideration.
Buy Target: 133’s for a bounce, low 120’s for a buy off a major support test.
Sell Target: 138 for a bounce, undefined for a buy off of major support (could be considered an investment).
Stop Loss: A hard break below the daily SMA 200 (131.95) and weekly EMA 50 (132.19) if trying a bounce, or a break below 120 if buying later at major support.
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.