Healthcare Investing: Think the Healthcare Sector is Strong?
By Bryan Bottarelli
In this article
Surprising news from the Commerce Department: a 3.9% drop in new home sales.
One of the weakest sectors registering on our WaveStrength Power Ratings charts comes in the form of healthcare.
This downside selling pressure is considered a welcome sign for all of our WOW readers…
Healthcare Investing: Think the Healthcare Sector is Strong?
The markets spent most of the day trading in the red today -- thanks to surprising news from the Commerce Department which reported a 3.9% drop in new home sales. That's the lowest level since June 2000, good for a seven-year low!
This downside move helped the two health-care plays we're holding in WaveStrength Options Weekly. As we've mentioned before, most analysts you listen to say to “overweight” the health-care sector.
But that's certainly not the indication that our charts are giving off right now. In fact, one of the weakest sectors registering on our WaveStrength Power Ratings charts comes in the form of healthcare. And within the healthcare sector, the weakest stock names happen to be Medtronic (MDT:NYSE) and Johnson & Johnson (JNJ:NYSE).
It would appear that MDT would be in for a good day today. After all, it just announced at the 56th Annual Scientific Session of the American College of Cardiology conference in New Orleans that no blood clots were seen in its experimental endeavor stent after two years of follow-up. But nevertheless, shares are down $0.84 (as I write) thanks to Boston Scientific (BSX:NYSE), which slid to a 4½-year low after a study from competitor Abbott Laboratories showed that Abbott's drug-coated stent was better at treating clogged heart arteries.
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This news from ABT effectively transforms the thinking process in the competitive landscape of drug-eluting stents -- as ABT's Xience drug-eluting stent is now considered to be superior to Boston Scientific's market-leading Taxus stent in reclogging arteries.
Healthcare Investing: The ABT News Is Just As Detrimental
As a carry-over effect of this news, both MDT and Johnson & Johnson are lower in today's trading. As a direct competitor to Boston Scientific, the ABT news is just as detrimental to MDT as it is to BSX. And since Johnson & Johnson also sells drug-coated stents in the United States, this news serves as a blow to its shares as well.
Of course, this downside selling pressure is considered a welcome sign for all of our WOW readers -- simply because their put options are gaining in value as health-care names like JNJ and MDT continue to fall.
So once again, you can listen to the analysts (and most likely be positioned in the wrong sectors) or you can let WaveStrength charting steer you in the right direction.
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Bryan Bottarelli is the head trading tactician for the WaveStrength Group, and is a contributing editor for Taipan Financial News. Coming off the floor of the Chicago Board Options Exchange (CBOE), Bryan uses WaveStrength chart forecasting to develop wining options plays for his service called WaveStrength Options Weekly. Bryan is also the lead editor of BottarelliResearch, an elite membership service that he independently publishes himself.
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Related Resources
Stent News: Boston Sci shares slide as Abbott stent shines. - Reuters
MDT: Medtronic stock quote and commentary. - Yahoo!Finance
JNJ: Johnson & Johnson stock quote and commentary. - Yahoo!Finance