ETF – Equal Weight Health Care approaching a major inflection point

$RYH – ETF

The ETF RYH has returned around 15% this year as any threats from the Trump administration has proved unfounded or ignored. Yesterday saw the first signs of exhaustion in the ETF as it posted a Bear Cage signal. This is enough to prompt some profit taking on any long positions but the question is whether a turning point is also occurring. Therefore we look at the top holdings and see where they are at.

Beginning with RYH the Bear Cage signal has appeared but it is not at Energy based resistance (Lines).  The weekly black line will need to move above price to signal a more powerful barrier is forming.

image of RYH ETF chart

 

Range Relativity measures multiple time frames for targets and over-extensions. This week the Blue (monthly) and Black (weekly) are above the upper quarterly (pink). This flags an overextension that would be confirmed and primed for a corrective move if price close the week below the lower black line at 164.53 where price closed close to. It would be the first time on the entire chart.

image of RYH ETF range relative

 

Turning to the top holdings the first is Vertex (VRTX). The chart posted a negative UFO last week and has retreated somewhat but it was not at a resistance level, so was simply a warning. That is in contrast to last December where buy signals appeared at what was a weekly and monthly (black and blue) zone of support.

image of VRTX healthcare stock chart

 

Range Relativity shows that price topped out at its quarterly target last week also from an overextended state as the weekly and monthly upper levels were above the quarterly point.

image of VRTX healthcare stock relative volume chart

 

Cerner (CERN) spiked higher on positive news recently but has since sported an Inside Bar pattern which shows a lack of momentum. This has cause a shift in what was weekly support to resistance, whilst a monthly level lies above that, indicating major headwinds above.

image of CERN healthcare stock chart

 

It is also overextended.

image of VRTX healthcare stock over extended chart

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Centene (CNC) has moved above its final Energy based resistance and flagged a Bear Cage as well.

image of CNC healthcare stock chart

 

This exhaustion married up with Monthly and Quarterly Relativity. It is below it weekly lower level for the first time this year.

image of CNC healthcare stock relative volume chart

 

PerkinElmer (PKI) is very strong and has no resistance at present.

image of PKI healthcare stock chart

Price has reached its annual target but is not yet overextended as Blue and Pink are below red.

image of PKI healthcare stock relative volume chart

 

HCA is the poor relation and is now trapped by the zone of support below that held last week, and the move of the weekly and monthly lines to above price and therefore strong resistance.

image of HCA healthcare stock chart

 

Intuitive Surgical (ISRG) is also very strong with no resistance.

image of ISRG healthcare stock chart

It is overextended but resistance will have to move to the top of the trend.

image of ISRG healthcare stock over extended chart

 

Varian (VAR) gapped higher last week on news and is in breakout mode. Note the the buy earlier on in the year when a Bull Whip signal appeared at the monthly support.

image of VAR healthcare stock chart

It has still to get near semi and annual targets.

image of VAr healthcare stock chart with relative volume

 

Idexx (IDXX) broke out in February with a PowwerPlay signal, but now is showing the first signs of a loss of momentum as weekly energy moves above price. The top was the converse of PowwerPlay it posting a SlammDunk.

image of IDXX healthcare stock chart

It is also overextended.

image of IDXX healthcare stock chart relative volume

 

Cooper Companies (COO) is also in Breakout mode.

image of COO healthcare stock chart

 

In spite of its strength it is not overextended and still is some way away for its annual target.

image of COO healthcare stock chart relative volume

 

In conclusion whilst the ETF has flagged a warning sign, only one stock is actually negative.  Four stocks have moved resistance to the top of the trend or reached major timing targets, but it will be the strongest four PKI,ISRG,VAR and COO) that we’ll need to see signs of exhaustion before a topping process on the whole sector can be called.

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Please note this is general advice from Trading Safely for all our clients and has been prepared without taking into account your personal objectives, financial situation or needs. If you do wish to consider acting on our information please contact a licensed financial advisor to discuss the appropriateness of this recommendation for your own personal financial circumstances. Please obtain any relevant product disclosure documents before deciding to invest. Trading derivatives, stocks and CFDs can lead to losses greater than your deposit.

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