Equipment Check:
Healthcare has been sprouting its wings overall with the XLV sporting a bullish inverse head and shoulders formation. A break above 149 could see a potential measured move to 163. Looking inside the diverse space, pharma has been leading biotech since the election last year, and that could be a sign of “risk off” as long as that relationship remains in play. The PPH trades in an illiquid fashion but does give a good indication of what is happening beneath the surface and it is now distancing itself from its 200-day SMA. Below is the daily chart of the IHI and this is showing excellent relative strength against sector rivals. This ETF is trading at 52-week highs, while the PPH, XLV, XBI, and IHF are all trading 7-14% from their recent annual peaks. The WEEKLY chart traded very tautly and it is just above a 3-week tight pattern with the 3 weeks ending between 1/24-2/7 all CLOSING within just six pennies of each other, not a typo. From that type of coiled digestion can come explosive moves upon breakout. The bears are not giving up however as the breakout has not made much headway, as we know the best breakouts tend to work right away, and the last 4 WEEKLY candles were two shooting stars followed by the last 2 weeks registering spinning tops. The burden of proof is still on the bears though as PRICE has not broken down yet in any meaningful way.