Folks, the Power Gauge has picked up on trend change in one corner of the market...
The 'Smart Money' Is Flowing Out of Health Care Stocks
By Marc Chaikin, founder, Chaikin Analytics
Folks, the Power Gauge has picked up on trend change in one corner of the market...
It's something that I recently shared first with paid subscribers to our Smart Money Trader publication. But I also want to make sure that Chaikin PowerFeed readers know what's going on.
Put simply, Wall Street's "smart money" has been moving away from the health care industry.
Longtime readers are familiar with our Chaikin Money Flow indicator. It tracks where the big institutional money is going. And based on the recent smart-money activity, our system is flashing a sign of caution for health care.
The industry has suffered from policy uncertainty and poorer-than-expected earnings on average. That's giving investors cause for concern.
And when we look through the lens of the Power Gauge, we see some troubling signs for health care stocks...
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Concerning Smart-Money Activity in Health Care
In the Power Gauge, we measure the sector through the Health Care Select Sector SPDR Fund (XLV). And right now, this exchange-traded fund ("ETF") gets a "bearish" rating from our system.
The Power Gauge is also flashing some warning signs for two ETFs that track subsectors in health care...
Both the SPDR S&P Health Care Equipment Fund (XHE) and the SPDR S&P Health Care Services Fund (XHS) are "very bearish" right now.
Digging deeper, XHE has just two stocks with "bullish" or better ratings versus 31 with "bearish" or worse ones. And XHS has only two holdings in "bullish" territory compared with 20 in "bearish" territory.
That's a worrying number of stocks with negative ratings versus positive ones.
Let's also consider some individual examples...
Laboratory-testing firm Quest Diagnostics (DGX) saw its Chaikin Money Flow turn negative recently. This was even after beating its earnings expectations last month.
In the chart below, you can see the stock's brief surge in the wake of the earnings beat – marked with the circle. But you'll also notice the collapse in Chaikin Money Flow. Take a look..
Meanwhile, industry giant UnitedHealth (UNH) has disappointed on earnings this year.
The company released its most recent report last week. But even in the days leading up to the release, the Chaikin Money Flow indicator showed that the smart money was already running away from the stock...
Next, the stock of palliative care provider Chemed (CHE) has collapsed since late June...
Its Chaikin Money Flow has been negative for most of the past few weeks – and has gotten worse recently. Take a look...
Putting it all together, Power Gauge is flashing some warning signs. In particular, it's telling us that the smart money on Wall Street has been moving away from the health care industry.
The Chaikin Money Flow indicator is powerful. It can point us to stocks that Wall Street loves... and it can show us the ones that the big institutions don't like.
Based on smart-money activity, our system is flashing caution for stocks in the health care industry right now.
Good investing,
Marc Chaikin
Marc Chaikin: 'Ask Me Anything'
This month, Marc Chaikin is doing something he has never done before. After a wild six months for stocks, Marc knows you may have many lingering questions. So, he'll be going on camera – NOT to discuss a specific opportunity, but instead to devote his time to answering YOUR most pressing questions.
But to do that, we need to hear from YOU. If something is keeping you up at night (whether it worries or excites you), we want to hear from you. Marc will answer as many questions as possible during his "Ask Me Anything" event this month.
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks have turned somewhat Bearish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Utilities
+1.51%
Communication
-1.39%
Consumer Staples
-1.64%
Energy
-1.73%
Information Technology
-1.88%
Industrials
-3.39%
Real Estate
-3.51%
Financial
-3.82%
Consumer Discretionary
-3.9%
Health Care
-3.92%
Materials
-6.12%
* * * *
Industry Focus
Regional Banking Services
22
116
7
Over the past 6 months, the Regional Banking subsector (KRE) has underperformed the S&P 500 by -10.39%. However, its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #9 of 21 subsectors and has moved down 6 slots over the past week.
Top Stocks
ABCB
Ameris Bancorp
BANC
Banc of California,
AX
Axos Financial, Inc.
* * * *
Top Movers
Gainers
MPWR
+10.46%
ALGN
+5.82%
FSLR
+5.29%
DHI
+5.22%
KMB
+4.83%
Losers
EMN
-19.03%
COIN
-16.7%
IR
-11.4%
GWW
-10.3%
AMZN
-8.27%
* * * *
Earnings Report
Earnings Surprises
REGN Regeneron Pharmaceuticals, Inc.
Q2
$12.89
Beat by $4.46
CNH CNH Industrial N.V.
Q2
$0.17
Beat by $0.03
LYB LyondellBasell Industries N.V.
Q2
$0.62
Missed by $-0.16
D Dominion Energy, Inc.
Q2
$0.75
Beat by $0.07
CHD Church & Dwight Co., Inc.
Q2
$0.94
Beat by $0.08
* * * *
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This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.
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