Spread: US Healthcare Sector: weakness continues

Spread: relative performance of “Y“ versus “Z” A rising chart means “Y” is outperforming “Z”. The spread says nothing about the absolute performance of either “Y” or “Z”.

The Healthcare sector has been an underperformer for several months now. Some signs of possible stabilization have been swept away easily by the recent sell-off. The primary down trend should now continue towards 260 (ratio x100) and possibly even the lows of 2011 around 240.

Whatever may be the case, continued underperformance is expected for the following weeks and months. We suggest avoiding any long-exposure in the sector until things cool down. Rotating towards energy or (to a much lesser extend) telecommunications is best.

  • Primary trend: negative
  • Outlook: mid-range down trend, still considerable down side risk
  • Strategy: avoid or minimize exposure to healthcare stocks

US Healthcare Sector (XLV) versus S&P500 (SPY)