Thursday, June 9, 2016 9:16 PM EDT
The health care sector has done a great job in recent weeks, as it broke through a descending trend channel at the end of May, as seen on the daily chart. Health care, represented by the XLV ETF, is set to test all-time highs in the coming weeks.
On the longer term chart, see below, the picture looks even more impressive. A long term trading range is about to be broken to the upside. The weekly chart shows how health care stocks went through an impressive uptrend since 2012, followed by a consolidation since 2015. It seems that the consolidation phase is coming to an end now.
This is important news as the health sector tends to lead stock markets. We can easily conclude that a breakout in the health care sector is a leading indicator for U.S. stocks in general.
Although the health sector looks impressively good, the biotechnology sector is really sensational. Biotech has established a long term triangle pattern, and the apex is closing down, as seen on the next chart. We will see a break out or break down very soon. As this pattern is in the making for a long time, the break will be impressive and aggressive.
Watch health and in particular biotechnology, as the former is a bellwether of the broad stock market and the latter is really sensational in its setup.
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