Over the past month, healthcare has been one of the top performing sectors. Healthcare is a big sector, and most of the industries within it can be traded via exchange-traded fund (ETF). With the strong recent performance, let’s look at potential buy locations in one well-known ETF and two that are not as well known.
The SPDR S&P Biotech ETF (XBI SPDR SP Biotech Shs XBI 84.35 +0.15%) is a popular healthcare ETF, with average volume of more than 4 million shares per day. In June, the price broke above an ascending channel, and it then came back to test that channel in August. After a major breakout, when the price comes back to test the prior pattern, it can often be a good entry point. That occurred near $76, and with the Sept. 6 close at $84.22, that buying opportunity has long passed.
However, another opportunity to buy on a pullback may not be far off. Going back to early 2016, rallies for XBI have typically advanced 14% to 24% before seeing a pullback. This rally off the August low is now within that range, meaning that the price could move a bit higher, but then a pullback of 6% to 10% is likely. The potential buy area on the pullback aligns with the trendline in play since the start of the year. If this trade setup develops, traders could place a target 5% above the most recent high (which is subject to change). (See also: Why the Biotech Rally Has More Room to Run.)
These are some of the strongest healthcare sector ETFs and the levels at which to consider buying them. …read more
Read more here: 3 Ways to Trade Strong Performance in Healthcare
Category: XBI, IHF, IHI