Well being-care shares suffered a scare this week.
The XLV health-care sector ETF tumbled greater than four% since Monday, its worst week of the yr and sending the group adverse for 2019.
Craig Johnson, chief market technician at Piper Jaffray, says the prognosis doesn’t look good.
“No query that the health-care sector has caught a chilly,” stated Johnson on CNBC’s “Buying and selling Nation” on Thursday. “The relative underperformance of about 950 foundation factors versus the S&P has been very painful during the last 30 days.”
“Once we break down the chart right here, you may see a transparent uptrend violation. You may see the divergence between the RSI index versus value. It seems wish to us the following help is available in at $85. Failure to carry there’s going to go away the following help at $74,” stated Johnson.
The XLV ETF, which holds corporations resembling Johnson & Johnson and Pfizer, ended Thursday just under $86. A transfer to $74 represents 14% draw back from its present ranges.
“We’re not shopping for at this time limit. We’ll watch for the shakeout. We predict there’s extra room to the draw back,” stated Johnson.
Mark Tepper, president and CEO of Strategic Wealth Companions, says traders ought to maintain regular within the face of elevated near-term headwinds.
“Lengthy-term I like them. Fairly frankly that is all political. That is 100% a response to the potential of Medicare for All turning into a actuality which might crush the sector,” Tepper stated on “Buying and selling Nation” on Thursday.
Democratic presidential candidates Bernie Sanders, Elizabeth Warren and Kamala Harris have voiced help for Medicare for All laws that would offer common well being protection, whereas President Donald Trump has pledged to handle well being care after the 2020 presidential election.
There are a number of Medicare for All proposals circulating in Congress, a few of which might principally abolish personal insurance coverage whereas others would merely create a public choice and go away personal plans largely in place. Nonetheless, the trade is fearful. On Tuesday, UnitedHealth CEO David Wichmann stated Medicare for All would “destabilize the nation’s well being system.”
Whereas the trade could also be fearful, Tepper steered the issues about Medicare for All are overblown.
“I do not assume Medicare for All occurs so I feel there’s an enormous alternative right here,” stated Tepper. “Within the quick run I do assume there’s political headwinds however as a long-term investor I feel you’ve got the chance to get in at a great value level now.”