Healthcare ETF (XLV) seeking first aid
by Tom Bowley, Stockcharts.com
Healthcare stocks led much of the market's rally off the 2009 lows - especially since early 2011. Ā That was then. Ā This is now. Ā Technical conditions have deteriorated immensely since the Spring of this year when warning signs emerged (see "Healthcare Stocks Are Vulnerable To Weakness Ahead"). Ā Negative divergences on the weekly MACD warned us of potential momentum issues. Ā Now we're seeing the confirmation in terms of major support breakdowns on the weekly chart and very bearish behavior asĀ resistance was recently tested. Ā Take a look at the chart:
For the first time since 2011, the 20 week EMA is pointing lower. Ā Worse yet is the fact that we tested that now-declining 20 week EMA on our last rally attempt and failed. Ā With theĀ weekly MACD making a bearish crossover of its centerline and a failure at 20 weekĀ EMA resistance, it appears to me as if this group is heading lower over the intermediate-term, especially on a relative basis. Ā Look for that blue relative uptrend line to be tested in the months ahead. Ā That suggests to me to look elsewhere in terms of long positions in the foreseeable future.
Happy trading!
Tom
About This Blog: The Don't Ignore This Chart blog contains daily articles with intriguing or unusual charts selected by one of our Senior Technical Analysts, along with a short explanation of what exactly caught their attention and why they believe the chart is worth noting.
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