Sunday, November 24, 2013

XLV Health Care Sector Weekly Chart Overbot Rising Wedge Negative Divergence Price Extended

XLV is a high-flyer. From 20 in 2009, at the QE1 bottom, to 55, +175%, a near 3-bagger, in 4 short years. Future Fed Chair Yellen does not see any asset bubbles in markets; everything looks perfectly fine; moving from 40 to 55 in 10 months, almost +40%, gaining 4% per month non-stop, is not a bubble as per the Fed. The blue rising wedge did not lead to price collapse which is very surprising. The pattern can only be negated by positive news out of left field and healthcare was handed a double whammy of joy this year; QE Infinity and Obamacare.  Price exploded into the stratosphere.  As part of a triumphant of bullishness, the chase for yield (divvy stocks), sends healthcare stocks even higher. This pumps the dividend stock bubble higher.

The red lines show the negative divergence and the pink dots show the price extended well above the moving averages requiring a mean reversion (lower prices). In the near-term, the short green line for the MACD line wants to squeeze out a jog move, down-up-down over the next 1 to 3 weeks and that may very well lock the top in place at, say, 55.2-58.30. The 40's would not be surprising in 2014. Perhaps the healthcare stocks, such as CI, HUM, HCA (all negatively diverged) are next to roll over like the tech and other high-flyers recently like TSLA? Keystone remains short XLV and the position has been sitting idle for weeks. This area and higher is an attractive place to increase shorts moving forward. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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