By Decision Point:
I have wondered how the Obamacare bill is going to affect the Health Care industry in general. I would hate to be an executive in that industry trying to decide which way to jump. Not only does one have to sort out the complexities of the bill, but the possibility of the bill being repealed (or partially repealed) by the next congress makes planning an impossibility.
One thing of which I am certain is that the market will figure things out first, and the conclusions will be evident in the charts.
To take a closer look, I have chosen a weekly chart of the Rydex equal-weighted version of the Health Care SPDR. We can see that prices recently made new all-time highs, but that the PMO has formed a negative divergence. Most significant is that the most recent PMO top has formed below its 10-EMA. On that basis, I’d have to say that the outlook is not positive.
Along the lines of my initial remarks, I must say that the chart does not reveal anything specifically prescient regarding the Health Care sector. This sector looks pretty much like the market in general, which is overbought and acting toppy.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.