Don't Ignore This Chart!

This Health Care Provider is Ready to Pop


In this week's episode of Sector Spotlight, I discussed the outlook for the Health Care sector based on the current alignment of the rotation on the Relative Rotation Graph and the seasonal expectation for the sector. Over the last 20 years, the Health Care sector outperformed the S&P 500 in 70% of occasions, and the average return for the sector in June is 0.8% over SPY. That's enough reason to zoom in on the individual stocks inside this sector.

On the RRG for this sector, the rotation and the heading on the tail of CNC are interesting. It is moving into the leading quadrant from improving and the RRG-Heading is between 0-90 degrees, which means that this stock is still gaining on both axes. The chart at the top of the article confirms this bullish outlook from the RRG.

Since its low back in 2019, CNC has put in four important higher lows. Over that same period, the rallies stalled around the level of the major 2018 peak, just below $75. The big difference between the current rally and the rallies that stalled since early 2020 is that relative strength has now managed to break above its falling resistance line, which is pulling the RRG-Lines higher.

We are not there yet, but a break above $75 for CNC, preferably holding up at a Friday close, would unlock a lot of fresh upside potential. Any follow-through rally after such a break would make CNC one of the more interesting stocks inside the Health Care sector.

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Julius de Kempenaer
Senior Technical Analyst,
CreatorRelative Rotation Graphs
FounderRRG Research
Host ofSector Spotlight

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Julius de Kempenaer
About the author: is the creator of Relative Rotation Graphs™. This unique method to visualize relative strength within a universe of securities was first launched on Bloomberg professional services terminals in January of 2011 and was released on in July of 2014. After graduating from the Dutch Royal Military Academy, Julius served in the Dutch Air Force in multiple officer ranks. He retired from the military as a captain in 1990 to enter the financial industry as a portfolio manager for Equity & Law (now part of AXA Investment Managers). Learn More
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