On the year long chart we some the following technical picture. There is a 1-year uptrend in place -- albeit a very slightly upward sloping uptrend. The XLV's dipped below this for a few days about a month ago, but have rebounded since. There is also a sharper upward sloping trend that started 2-3 weeks ago in place. There are two important technical barriers the index has to break before it can make a solid move higher. The first is resistance established earlier this year. The second is a downward sloping trendline that formed resistance for the ETFs decline starting in early June
This chart shows in a bit more detail where the current price is in relation to the above mention resistance levels. Notice an upward move in the next week through both lines of resistance would indicate a possible further move upward.
From a simple moving average perspective, notice the 10 and 20 SMAs are both moving higher and the 10 day SMA is above the 20. While the 50 day SMA is still moving lower its trajectory has decreased. Finally, the ETF crossed the 200 day SMA today.
I want to caution -- I'm still not a big fan of the overall market. The advance/decline lines don't look good and the transportation average has not confirmed any upward move. In other words, the overall picture isn't great. But it you want to stay in the market, moving to a more conservative sector makes sense in the current environment. And health care clearly fits the bill.
