Helping Self-Directed Investors Succeed Blog - Technical Review of Three Healthcare Sector SPDRS as of December 6th, 2019

Technical Review of Three Healthcare Sector SPDRS as of December 6th, 2019

December 6th, 2019

Healthcare is showing signs of resurgence despite all the politics and uncertainties surrounding this sector. Four SPDRS cover this domain and in this edition we are focusing on three of them: Health Care Equipment (XHE), Health Care Services (XHS) and the broader Health Care SPDR (XLV). All these three ETFS appear to be heading for a respectable finish.

Healthcare Equipment (XHE)

XHE is up nearly +22% in 2019 after having a very strong 2018 as well. The ETF broke above a long 4-month consolidation the week of November 25th. This breakout has also occured above an even longer 11-month double-bottom base which is a positive. A 10-week SMA/40-week SMA bullish crossover is reinforcing this positive development. After breaking out the previous week, the ETF could not close above the break-out week's high which makes it an inside week which doesn't convey technical strength. XHE faces resistance around the $88 levels which is not much higher. Self-directed investors looking at long term positioning should consider this resistance in their decision making.

Healthcare Services (XHS)

XHS broke out of a long 11-month consolidation the week of November 18th. The week of November 25th was not very strong for the ETF as it closed near the lows. The ETF made it up this week by logging a strong positive key reversal. For the year the ETF is higher by +17%. The 10-week SMA/40-week SMA bullish crossover witnessed in XHS ia another positive for the long term oriented investor. But, XHS is facing very stiff resistance around the $76/$77 levels which is an in important factor to consider.

Healthcare (XLV)

XLV provides exposure to the broader healthcare sector and this SPDR broke out the week of Nov 11th and since then it has been steadily moved higher for three consecutive weeks. XLV's breakout is even more impressive considering the duration of the consolidation which is over 14 months. The sector was under considerable pressure and continues to face political uncertainty. This week XHE also logged a positive key reveral. XLV, unlike the other two ETFS featured in this article, doesn't seem to be facing any nearby resistance which is an important positive. XHE is +16% for this and slightly lagging the other two ETFS.

From a technical perspecrive, from our point of view XHE and XLV are looking better positioned than XHS. Self-directed investors must still not lose sight of the political headwinds which may envelop the sector in the upcoming election year.

Good Luck and Happy Investing!

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