RRG Charts

Watching the Health Care Sector This Week As It Started Rotating at a Strong RRG-Heading


Last week's sector rotation has pushed the Health Care sector into the improving quadrant at a positive RRG-Heading. This makes the sector stand out in a positive way on the DAILY Relative Rotation Graph for US sectors.

The only two other sectors that are rotating from left to right (positive direction) are Consumer Staples and Technology, but they rolled over and lost a bit of relative momentum in the second half of the week, making them move at a heading between 90-180 degrees. Not bad, as it still means improving relative strength, but with deteriorating momentum.

This rotation makes Health Care the sector to watch for the coming week imho.

On the chart above, we see that the rally in XLV stalled around the previous peaks that were set in January and February. The sideways move that followed from late April onward caused the relative strength vs. SPY and other sectors to deteriorate.

As of last month (June), however, this deterioration has come to an end, and the RS-Line started to flatten and show early signs of a turnaround on the daily timeframe.

This improvement has been picked up by the RRG-Lines, which are now both moving higher. JdK RS-Momentum is already above 100, which positions XLV inside the improving quadrant and heading towards leading.

Going forward, the horizontal support area around $96 should now hold to maintain this positive rotation. The upside of this range lies near $104, which provides plenty of upside potential for XLV. Intermediate resistance is found around $100, where a few daily highs have clustered in past weeks.

#StaySafe, --Julius

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

Please find my handles for social media channels under the Bio below.

Feedback, comments or questions are welcome at Juliusdk@stockcharts.com. I cannot promise to respond to each and every message, but I will certainly read them and, where reasonably possible, use the feedback and comments or answer questions.

To discuss RRG with me on S.C.A.N., tag me using the handle Julius_RRG.

RRG, Relative Rotation Graphs, JdK RS-Ratio, and JdK RS-Momentum are registered trademarks of RRG Research.

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 StockCharts.com 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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