XLV Healthcare ETF Weekly and Monthly Charts; H&S; Rally on Weekly Basis to Begin but Monthly Chart Remains Bearish for Long-Term

Medic! Medic! XLV needs resuscitation (that's a ten-dollar college word). Doctors give me the cure. Bad Case of Loving You. No pill is gonna cure that ill. Lots of pundits are saying healthcare is a great long trade going forward since it is already beaten down. That is a stupid reason. Why not look at the charts so you will know for sure?

We can look at the weekly spaghetti first. Price is testing the neckline of an H&S (head and shoulders) currently so it is bounce or die time. A failure from the 137 neck, with the head at 156, would target 118 that just so happens to be all that strong price support during 2022 and 2023. A failure of the H&S sending price to Hades will make the television pundits look foolish for touting the healthcare stocks.

The falling green wedge is a bullish pattern. Price would be expected to bounce from it and it did, this week, with XLV at 140 three points above the neckline critical support. The green lines show possie d and want price to rally higher, however, the red lines for the MACD line and the money flow are weak and bleak wanting another low in price on the weekly basis.

Thus, mathematicians say thus a lot, that is why we are never invited to any fun parties, price will want to come back down for another look at the neck and the price low from last week (blue line). At that time, say a week or so out, the MACD and money flow will likely be positively diverged and confirm that the bottom is in for XLV on the weekly basis and a rally should begin.

Price has violated the lower band, that is 137 same as the neckline, so the middle band at 148 is on the table. If price rallies that high it may want 152 for a gap fill. The ADX pink box shows that the confirmed strong trend higher for XLV ended 3 months ago. The Aroon indicates that all the bears remain bearish on XLV and about three-quarters of the XLV bulls remain bearish. This is a glaring contrarian indicator. Everyone is loaded up on the bear side of the boat indicating that a relief rally is on tap soon or at any time forward.

So the XLV weekly chart is very constructive and bullish and you can catch the exact bottom in a week or so to ride a multi-week rally higher. However, there are dark clouds and skies waiting for the XLV healthcare ETF on a monthly (long-term) basis.

The weekly chart is pretty but the monthly chart is ugly. The monthly chart is bleeding red which is never a good sign. But how can that be? Keystone just said the XLV is setting up for a rally on a weekly basis. Remember, technical trading is playing multi-dimensional chess where time is the dimension not space. You must play the minute, hourly, daily, weekly, and monthly charts against one another to paint a path forward for price.

On the monthly chart, price prints a clear top that is an easy call. Price makes a higher high, while forming a rising red wedge (bearish), and universal negative divergence across all chart indicators (red lines). Price was set up for a neggie d spanddown on the monthly basis and she receives her spanking now displaying red cheeks. The problem with the monthly chart, for longs, is the weak and bleak chart indicators. The RSI and stochastics are each about to slip below 50% into bear territory on a long-term basis. The MACD just performs a negative cross. The other indicators are weak and bleak wanting to see a lower low in price on the monthly basis. There is no reason for price to come back up to new highs again.

The ADX shows that the last strong trend higher for the rally ended as 2019 started. The Aroon shows that nearly all the XLV bulls remain bullish and almost all the XLV bears also remain bullish. Everyone is bullish on the monthly basis believing that in the long-term XLV will be a lot higher. Idiots. The chart tells you the complete opposite.

Typically, as a weekly chart sets-up with positive divergence, one or two of the indicators on the monthly chart would also show possie d and conspire with the weekly chart to boost price for a multi-week rally. Not this time. The monthly chart is ugly. This hints that the multi-week rally for XLV that should start over the next couple weeks may not be that strong or have much legs higher. If you are playing XLV or healthcare stocks, it would probably be wise to consider ditching the shares as the rally occurs and be nimble, since that multi-week rally may not have much legs before another smackdown occurs because of the long-term negativity in the monthly chart.

Is all that mumbo-jumbo above clear as mud? XLV is set up to bottom over the next couple weeks and then rally a few weeks but then die again due to a horrible monthly chart that wants lower lows in price. A failure of the neck at 137 for the H&S targets 118 and if that fails, well, bend over if you are still holding on to healthcare stocks. You will lose all your money and become a Basket Case at the asylum, and give yourself the creeps. 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.

Note Added Friday, 12/27/24, at 4:04 PM EST: The session ends the day and week with XLV at 138.96. The all-time record high is 158.33 on 9/4/24.