Medic! Medic! Mr Healthcare is taking ill. Get him into the emergency room. Stat! Paging Doctor Ben Dover. Paging Doctor Ben Dover. Everybody and his bro are long the healthcare sector. Frankie, the Uber driver, said he took an entire paycheck last week and bot the XLV ETF because the guy on television said it was a good investment. The two purple circles show distribution taking place this year on the monthly basis. That money manager or institution that is handing shares of XLV to you with one hand, is sticking a shiv into your ribs with the other. XLV has had a spectacular run, but now it is time to wheel Mr Healthcare into the hospital. The neggie d is rotting him out from the inside and sadly the prognosis is not good. XLV will be going into cardiac arrest.
XLV has gone up for so long everyone is taking it for granted. It is time to have a reality check. Over 10 years, XLV explodes higher from 20 to 110-ish a big +450% gain; a 5-bagger almost a 6-bagger. If long and holding big profits, take the money and run. There is nothing else left there for you.
The monthly chart shows a rising wedge, overbot stochastics, universal negative divergence, an upper band violation and price extended above the moving average ribbon; all these indications are bearish. The red lines show the neggie d that wants to see a spankdown going forward on the monthly basis. The little green lines show the MACD trying to gather up some fumes to try and keep things elevated for a couple more weeks or a month but that will likely be a fruitless endeavor.
The upper band is violated so the middle band at 94 is on the table and the lower band at 81. It is reasonable to expect XLV at 75-90 at year-end. The ADX for the monthly is down in the basement at 18 so the move higher in price is NOT a strong trend higher. The last strong trend for XLV was in 2013-2016 (pink box) to the upside. In 2018, the ADX tried to break out higher to confirm a strong trend higher but instead it folded like a cheap suit. As XLV price moves higher the ADX indicates that the strength of the trend becomes weaker and weaker. XLV is above the 20 MA above the 50 MA above the 100 above the 150 above the 200 so a mean reversion lower is desperately needed. Just think, a year or two down the road price will likely be below the 200-month MA.
The weekly chart is just as sad as the monthly. The red lines sow the neggie d in play wanting price to receive a smackdown right now on the weekly basis. The overbot conditions now or this year and the rising wedge vibe are bearish indications. Price is extended above its moving average ribbon so a mean reversion lower is needed. The upper band is at 110 so this must be respected. XLV is a good short going forward on the weekly and monthly basis. The short can be entered anywhere between 100-120. The Aroon on the weekly is set up for a potential negative cross going forward.
Let's look on the hourly and daily to see if a short entry can be timed or if a more specific topping number becomes apparent. Keystone's 80/20 Rule says 8's lead to 2's so the breach of 80 opens the door to 120. The 108 would hint that 112 is coming.
The daily is a nice short set-up. Keystone is not in it but XLV is a nice short from here on the daily chart with neggie d in play. The 2-hour stumbles sideways but also shows neggie d. Short it starting tomorrow anywhere above 106. The concern would be if a vaccine was announced or some other happy talk news that may create lift to price but even so, negative divergence is a strong force. XLV had lots of fun over the last decade traveling up and up on plenty of fuel but the indicating gauges show that there is no more fuel remaining.
Medic! Doctor Ben Dover! Mr Healthcare does not have a pulse after he saw the negative divergence on his medical chart. What should we do? Wheel him in, put him on a ventilator and we will monitor him until he kicks the bucket which should be about....... now. Beeeep. Beeeeep. Code red! Stat! You bess not watch. Doctor Ben Dover is using the defibrillators on Mr Healthcare. It is not a pretty sight. 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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