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.

Chart 1

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.  

Chart 2

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.