The health care sector as tracked by the Health Care Select Sector SPDR ETF (NYSE: XLV) broke out last week, and it is pointing to more gains to come.
Since the election, the health care exchange-traded fund has soared over 20%, outperforming the S&P 500 Index by 5 percentage points.
This outperformance will have its ups and downs, but after the breakout last week, health care has more room to run.
Take a look:
The red line represents the previous all-time high for the ETF set in 2015. Prices broke above that level in June, and then hit resistance around $81.
That’s where prices created the more recent highs, before drifting back down to test the previous all-time-high price level, before then surging higher.
Ultimately, prices broke out above the $81 level.
It was an extremely healthy uptrend to see prices retrace back to test the all-time high after breaking out above that price range, and the latest breakout is confirmation the health care sector is in a renewed uptrend.
While I don’t expect prices to keep surging this sharply, the sector will continue to trend upward from here.
Chad Shoop, CMT
Editor, Automatic Profits Alert