Outside of company specifics, the broad market environment and the sector are the biggest influences of a stock's price. The S&P 500 hit a new high recently so we are in a bull market. The Health Care SPDR (XLV) also hit a new high recently and it is one of the leading sectors. This combination bodes well for stocks in the healthcare sector and I will highlight a breakout in Henry Schein (HSIC), a company that supplies dental products and services, as well as healthcare products and services.
First, the long-term trend is up. The chart shows a large inverse head-and-shoulders pattern from November to July. This is a big bullish reversal pattern and the stock broke above resistance with a surge in early August. In addition, the PPO(50,200,0) turned positive and this means the 50-day EMA is above the 200-day EMA.
The stock advanced some 20% from early June to early August and then corrected with a falling wedge. The pattern is a bit volatile with the spike above 84 and gap in late August, but I still view it as a correction after the big surge. Notice that is retraced 50-61.8% of the advance. More importantly, it looks like the correction is ending as the stock broke out of the pattern.
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Topics for Tuesday, September 11th:
- Stocks Still Outperforming Bonds (TLT, 2-yr Yield)
- DAX, Shanghai and EEM Weigh on World (sans USA)
- XLI, XLP and XLU Lead in September (plus sectors)
- Industry Group ETFs (IBB, HACK, AMLP...)
- NOT On Trend (ITB, XES, XME, SLX…)
- Q&A: Scanning for Strong Downtrends and Setting Profit Targets
- Stocks to Watch: Two BBand Squeezes (BAC, JPM)
- Click here to Watch
Plan Your Trade and Trade Your Plan.
- Arthur Hill, CMT
Senior Technical Analyst, StockCharts.com
Book: Define the Trend and Trade the Trend
Twitter: Follow @ArthurHill
