Health Care and Financials dramatically outpaced the other sectors last week as the S&P 500 SPDR (NYSE:SPY) created a new high at $180.83. With only minor pullbacks since mid-October the buyers have been aggressive, indicating this is likely to be another bullish week for stocks. Prior runs to the upside this year have lasted about a month to a month-and-a-half; this run is around the month-and-a-half mark so a bigger correction is likely forthcoming soon though. Probabilities still indicate a bullish week, and therefore, the Healthcare Select Sector SPDR (NYSE:XLV) and the Financials Select Sector SPDR (ARCA:XLF) will likely be among the top performers if that occurs. On the other hand, a downside week will likely see the Consumer Staples Select Sector SPDR (NYSE:XLP) perform relatively well.

Along with stocks to watch in the each sector, here is the technical outlook for Health Care and Financials.

The Healthcare Select Sector SPDR moved up 1.71% last week, outshining all other sectors. This has been the strongest sector over the last year as well, so while it may not be a top performer every week, this is definitely a sector most traders and investors should be watching. The ETF broke above a rising trend channel, and is headed for the next target of $56.36. The average weekly range is $1.20, but with a holiday on Thursday both buying and selling are likely to be somewhat muted. Therefore, it will likely take more than a week for the price to reach the target. A drop back below $54--also not likely this week--signals a move back toward the lower portion of the channel near $52.

Biogen (Nasdaq:BIIB) jumped 13.15% on November 22, and is a stock to watch this week in the Health Care sector. The intra-day range on November 22 was $289.97 to $274.98, so a move beyond either the high or low provides insight into the likely short-term direction of the stock. A drop, especially a close, below $274.98 indicates some profit taking, with minor support at $260 and more significant support at $254 to $253. A rally beyond $290 indicates continued buying pressure--the next target is $297 based on a 161.8 % Fibonacci Expansion level. It is also quite possible that the November 22 high and low will act as resistance and support this week, making the stock range-bound, as participants decide what to do at this level.

Financials Select Sector SPDR broke a triangle pattern which extends back to June. This is a bullish continuation signal, providing a longer-term target of $23, and a short-term target of $22. Support is $21, with additional support at $20.40. With a weekly average range of just over $0.50, and a shortened trading week, it could take a couple weeks to reach the first target. Not likely to occur in the short-term, a drop back the triangle low near $20 signals the uptrend is in danger.

IntercontinentalExchange (NYSE:ICE) took a strong tilt to the upside, climbing $7.44% last week. The next target is $222, and with a weekly average range of $7.87 that could easily be reached or eclipsed this week. $200 to $190 is a strong support and buying region, as this is where short-term and longer-term trendlines intersect respectively. The uptrend is robust currently, and a breach of $190 is likely some weeks or even months off, but a drop below the levels signals the uptrend is slowing and potentially in danger.

The Bottom Line

A shortened trading week due to the Thanksgiving holiday will likely result in a quieter, but bullish, week. While short-term and long-term momentum are currently up, this market has been advancing for a month-and-a-half without a significant pullback. At some point over the next few weeks a larger pullback is highly likely to materialize. Stop losses are recommended to control risk when such an event occurs, yet trading on the long side in strong sectors and stocks is still the most advantageous strategy.

Related Articles
  1. Fundamental Analysis

    Analyzing A Bank's Financial Statements

    A careful review of a bank's financial statements can help you identify key factors in a potential investment.
  2. Fundamental Analysis

    Investing In Healthcare Facilities

    Read on to learn about how to value heathcare sector stocks.
  3. Fundamental Analysis

    How To Value An Insurance Company

    In the insurance space, accurate predictions of metrics such as ROE are important, and paying a low P/B can help put the odds in investors' favor.
  4. Insurance

    Healthcare Funds: Give Your Portfolio A Booster Shot

    Find out how healthcare investments can become the strongest asset in your portfolio.
  5. Mutual Funds & ETFs

    Investing In The Healthcare Sector

    Perform a thorough checkup to uncover a medical stock with a clean bill of health.
  6. Mutual Funds & ETFs

    ETF Analysis: Direxion Daily Healthcare Bull 3X

    Learn about the Direxion Daily Healthcare Bull. This is a leveraged ETF that tracks the health care sector, which is a leader in this bull market.
  7. Mutual Funds & ETFs

    Comparing ETFs Vs. Mutual Funds For Tax Efficiency

    Explore a comparison of mutual funds and exchange-traded funds, or ETFs, and learn what makes ETFs a significantly more tax-efficient investment.
  8. Mutual Funds & ETFs

    ETF Analysis: Vanguard Small-Cap Value

    Find out about the Vanguard Small-Cap Value ETF, and explore detailed analysis of its characteristics, suitability, recommendations and historical statistics.
  9. Mutual Funds & ETFs

    ETF Analysis: Vanguard Intermediate-Term Corp Bd

    Learn about the Vanguard Intermediate-Term Corporate Bond ETF, and explore detailed analysis of the fund's characteristics, risks and historical statistics.
  10. Insurance

    Whole or Term Life Insurance: Which Is Better?

    Learn the difference between term life insurance and whole life insurance. Understand when it is beneficial to buy each type of life insurance.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  3. Net Collections

    A term used in medical accounting to describe the amount of money ...
  4. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  5. Fintech

    Fintech is a portmanteau of financial technology that describes ...
  6. Indicator

    Indicators are statistics used to measure current conditions ...
RELATED FAQS
  1. Tame Panic Selling with the Exhausted Selling Model

    The exhausted selling model is a pricing strategy used to identify and trade based off of the price floor of a security. ... Read Full Answer >>
  2. Point and Figure Charting Using Count Analysis

    Count analysis is a means of interpreting point and figure charts to measure vertical price movements. Technical analysts ... Read Full Answer >>
  3. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  4. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  5. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  6. What role does the agency problem play in the modern Health Care industry?

    Agency problems vary from health care system to health care system, and not all economists agree on the degree and desirability ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!