Message Apr Market

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22/4/2016 M essage Apr 22, 2016 #1 - The Mar ket M essage - StockChar ts.com

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The StockCharts.com Market MessageFeaturing our commentators, John Murphy and Arthur Hill

Fri, Apr 22 2016 11:13 AM ET

HEALTHCARE PROVIDER INDEX REACHES SIX-MONTH HIGH -- LED BY AETNA AND ANTHEM --RAIL INDEX TURNS UP -- LEADERS ARENORFOLK SOUTHERN, KANSAS CITY SOUTHERN, AND UNION PACIFIC -- DOW TRANSPORTS EXCEED MAJOR RESISTANCELINE -- S&P GROWTH ISHARESUNDERPERFORM -- THAT MAY LEADOVERBOUGHT S&P 500 INTO A SHORT-TERMCORRECTON

By John Murphy

HEALTH CARE PROVIDERS INDEX TURNS UP ... I've been writing a lot

about the recent upturn in the healthcare sector. Most of my attention has been on biotechs, pharmaceuticals, and medical equipment stocks (Boston Scientific,

Thermo Fisher, Zimmer, and Waters). Today's message will focus on health care

providers which are also healthcare leaders. Chart 1 shows the Dow Jones US

Health Care Providers Index ($DJUSHP) trading at a new six-month high

and well above its 200-day moving average. Its relative strength ratio (top of chart)

is improving as well. A number of individual stocks in that group also look strong.

http://stockcharts.com/members/http://stockcharts.com/


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(click to view a live version of this chart) Chart 1

AETNA AND ANTHEM ARE HEALTHCARE LEADERS ... Aetna (AET) is

one of today's top percentage gainers in a rising healthcare sector. Chart 2 shows

the health care provider nearing a six-month high after clearing its 200-day

average. Its 50-day average (blue line) is about to cross over its 200-day (blue line)

which is bullish for the stock. Its relative strength line (above chart) is improving as

well. Chart 3 shows Anthem (ANTM) in an even stronger position. As I've been

showing recently, money has been flowing into an undervalued healthcare sector.

http://stockcharts.com/h-sc/ui?&s=$DJUSHP&p=D&y=1&m=0&d=0&id=p08669356742&&http://stockcharts.com/h-sc/ui?&s=$DJUSHP&p=D&y=1&m=0&d=0&id=p08669356742&&


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http://stockcharts.com/h-sc/ui?&s=AET&p=D&y=1&m=0&d=0&id=p82135771851http://stockcharts.com/h-sc/ui?&s=AET&p=D&y=1&m=0&d=0&id=p82135771851


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RIDING THE RAILS... Rails are turning up as part of an improving

transportation group. Chart 4 shows the Dow Jones Railroad Index

($DJUSRR) surging to a five-month high after clearing its 200-day average. The

rail/SPX ratio (top of chart) has turned up as well. Norfolk Southern (NSC) is

the day's rail leader. Chart 5 shows NSC gapping 8% higher. Other rails have turned

up as well.

http://stockcharts.com/h-sc/ui?&s=ANTM&p=D&y=1&m=0&d=0&id=p58057552650http://stockcharts.com/h-sc/ui?&s=ANTM&p=D&y=1&m=0&d=0&id=p58057552650


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(click to view a live version of this chart)

http://stockcharts.com/h-sc/ui?&s=NSC&p=D&y=0&m=6&d=0&id=p08552373825http://stockcharts.com/h-sc/ui?&s=NSC&p=D&y=0&m=6&d=0&id=p08552373825http://stockcharts.com/h-sc/ui?&s=$DJUSRR&p=D&y=0&m=10&d=0&id=p84766811962http://stockcharts.com/h-sc/ui?&s=$DJUSRR&p=D&y=0&m=10&d=0&id=p84766811962


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Chart 5

KSU AND UNION PACIFIC TURN UP... Chart 6 shows Kansas City

Southern (KSU) rallying to the highest level since last October. It's the strongest

of the rail stocks. Chart 7 shows Union Pacific (UNP) rising to a six-month high

after clearing its 200-day average. [CSX has cleared its 200-day line as well]. Rails

may be benefiting from more traffic in improving commodity markets.


http://stockcharts.com/h-sc/ui?&s=KSU&p=D&y=1&m=0&d=0&id=p29682736147http://stockcharts.com/h-sc/ui?&s=KSU&p=D&y=1&m=0&d=0&id=p29682736147


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TRANSPORTATION INDEX CLEARS FALLING TRENDLINE...

Transportation stocks are another undervalued part of the market that are finally

turning up. Chart 8 shows the Dow Jones Transportation Average on the verge of a new five-month high after rising above a resistance trendline starting last

March. It's also well above its 200-day line. Transports are one of the most

economically-sensitive parts of the market. A upside breakout would also put the

TRAN in better sync with the Dow Industrials which are testing their old highs.

The TRAN/INDU ratio (top of chart) show that transports have actually been

outperforming the industrials since January.

http://stockcharts.com/h-sc/ui?&s=UNP&p=D&y=1&m=0&d=0&id=p14171438496http://stockcharts.com/h-sc/ui?&s=UNP&p=D&y=1&m=0&d=0&id=p14171438496


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GROWTH ISHARES WEAKEN... Yesterday's message showed funds starting to

move out of growth sectors of the market (like technology) into more undervalued

parts of the market that include energy, financials, and healthcare. We're seeing

more evidence of that today with selloffs in big tech stocks like Microsoft and

Google. Meanwhile, lagging sectors (which include transportation stocks) are

starting to outperform. Chart 9 shows the S&P Growth iShares (IVW) heading

lower today. The IVW/SPX ratio (top of chart) is near a new 2016 low. Value stocks

are holding up better. It remains to be seen if that's enough to prevent a market

pullback.

http://stockcharts.com/h-sc/ui?&s=$TRAN&p=D&y=1&m=4&d=0&id=p77842642056&&http://stockcharts.com/h-sc/ui?&s=$TRAN&p=D&y=1&m=4&d=0&id=p77842642056&&


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OVERBOUGHT S&P 500 VULNERABLE TO PROFIT-TAKING... The daily

bars in Chart 10 show the S&P 500 up against resistance at its fourth quarter high.

In addition, its 14-day RSI line (top of chart) is forming a small "double top" near

overbought territory at 70 (see arrow). Daily MACD lines (below chart) are starting

to roll over as well (blue circle). That leaves the S&P vulnerable to short-term profit-

taking which could it bring it back to its early April low or moving average lines.

http://stockcharts.com/h-sc/ui?&s=IVW&p=D&y=0&m=6&d=0&id=p80174547633&&http://stockcharts.com/h-sc/ui?&s=IVW&p=D&y=0&m=6&d=0&id=p80174547633&&


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