We had a bullish write up about the Semi sector in NFTRH 666(6). Let’s call that a wild card among the less defensive market areas due to its growing field of sectors requiring its products, not to mention the bullish chart of SMH we reviewed, which is breaking out this week.
On the other side is the more defensive Healthcare sector, which may well have bottomed in relation to the S&P 500. Credit goes to my email friend Betty, who sent me some information about this and jogged me to review one of our long-standing themes, which is Healthcare leadership.
First, XLV (daily) appears at least as bullish nominally as most other US market sectors.
But let’s also note that XLV (weekly) has hit and slightly exceed an upside target we noted last year based on the shaded pattern. If you believe in targets as stop signs (I don’t) or that the market is going to take a real correction imminently, that’s a caution sign.
Now, assuming an ongoing stable backdrop (big assumption, I grant you) let’s note that a daily chart of XLV/SPY appears to have made a good bottom. The SMA 200 was taken out in July and there has been follow through.
But the big picture is interesting for more than the relative standing of Healthcare to the broad market. It is also useful as a bear market indicator. At least it was during the last two bear markets as it made a bottom and turned up, being a relatively defensive sector.
Just an FYI update for you to consider, whether for its broad market signaling or for the potential leadership of Healthcare if things remain stable.