Conclusion, Investment Implications, Strategy
The SPDR S&P Health Care Equipment ETF (XHE) is in the midst of a mid March price advance that is being confirmed by a positive major trend, quarterly relative outperformance versus the benchmark S&P 500, and monthly asset expansion. These three metrics, particularly relative outperformance and expanding investor asset flows, indicate favorable conditions for the current rise in XHE to continue.
Current Sector & Industry Group Ideas
Table 1 below is also accessible via the Sector & Industry Group Ideas rectangle at the top of the Research Center.
Table 1
This table also regularly appears in our weekly Keys To This Week: Sector & Industry Groups report published on Monday mornings.
Analysis and Rationale
The SPDR S&P Health Care Equipment ETF (XHE) employs a sampling strategy. It generally invests substantially all, but at least 80%, of its total assets in the securities comprising the S&P Health Care Equipment Select Industry Index, which represents the health care equipment segment of the S&P Total Market Index.
The upper panel of Chart 1 below plots XHE daily since January along with its 200-day moving average, a widely-watched major trend proxy. The lower panel plots the corresponding daily relative performance of XHE versus the SPDR S&P 500 ETF Trust (SPY) along with its 63-day moving average, the latter which we use to identify the Strategic (quarterly) trend of relative performance versus the broad market.
The green highlights in the upper panel show that XHE rose above its 200-day moving average on Jan 12th to indicate a major bullish trend change, and, for the most part, the ETF has remained above it since then The 200-day is currently situated at 91.68 and represents major underlying support. The green highlights in the lower panel show that the daily relative performance line between XHE and the S&P 500 (SPY) rose above its 63-day moving average on Apr 11th to indicate an emerging trend of quarterly (our Strategic time frame) relative outperformance versus the broad market.
The upper panel of Chart 2 below also plots XHE since January with its 200-day moving average.
The lower panel plots the daily total net assets invested in XHE since January along with their 21-day moving average, which we use to identify a monthly trend of expansion or contraction. Expanding assets are the fuel that drives a price advance. The green arrow points out that these assets are amid an Apr 5th trend of monthly expansion. As long as this asset expansion continues, the current mid-March rise in XHE is also likely to continue.