Health Care (XLV) ETF has lagged the S&P for the past few years. Is the lagging trend about to end? It sure could and we should find out very soon!

This chart looks at the Health Care/S&P Ratio (XLV/SPY), which reflects that it has created a series of lower highs and lower lows inside of falling channel (1). Over the past 6-months the ratio has created a series of higher lows, reflecting out performance of XLV to the broad markets.

The ratio is testing a support/resistance line at (2). If the ratio breaks out at (2), it would suggest that health care stocks will continue to outperform the broad markets.

Any stocks in the health care field creating a bullish pattern? Yup!

Below looks at Merck (MRK) from Marketsmith and Investors

The trend for MRK remains up. MRK over the past few months looks to be creating a bullish ascending triangle. Two-thirds of the time, this pattern leads to higher price.

MRK is attempting a bullish breakout at (1). If successful, look for it to do very well in the weeks to come.


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