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Health stocks continue declines with the market

Health stocks continue declines with the market

Health care, medical and health insurance stocks hardly are safe havens when the stock market tumbles, as it did last week. One way to look at the sector is to follow the exchange traded fund (mutual fund), or what’s known as spyder, which reflects the market’s valuation of a portfolio of health stocks held by

Health care, medical and health insurance stocks hardly are safe havens when the stock market tumbles, as it did last week. One way to look at the sector is to follow the exchange traded fund (mutual fund), or what’s known as spyder, which reflects the market’s valuation of a portfolio of health stocks held by the Health Care Select sector (symbol XLV). On Friday, XLV gapped down on a jump in volume, which is bearish, and last week it also fell on higher volume. But note that the CMF, which reflects the movement of funds, shows that investors have been putting more money into XLV in the last week or so, suggesting there may be some bottom-fishing going on, a dangerous practice for all but the nimble traders. The point and figure chart shows how XLV has been dropping, but it also says that the bullish objective is $44, substantially above the current $27. So the question is whether the sector is bottoming out and whether the market is nearing a rally of some kind. That’s not something I want to predict, but Investor’s Business Daily notes that three out of four stocks drop when the market does. This suggests that the outlook for health care stocks depends on what happens to the broader market. Like XLV, the Dow Jones Healthcare Health Care Index of health care stocks is testing its support level. The S&P Health Care Sector Bullish percent index indicates only about 33% of health care stocks are in an uptrend, and its point and figure chart says the sector already is in a bear market. Health mutual funds are here and here.

Ben
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