While Wall Street was putting out flames in tech earnings, one sector has had a stealth rally to lead the SP 500.
Health care stocks are not only the best SP 500 performer in the past month, rallying nearly 7 percent, but they’re also closing in on record highs set in January.
Matt Maley, equity strategist at Miller Tabak, says the group has more room to run.
“Overall they look quite good,” Maley told CNBC’s “Trading Nation” on Friday. “Look at the XLV, and it’s been making a nice series of higher lows and higher highs. The same thing in the IBB biotech chart, it’s been doing the same thing.”
The XLV health care ETF has had a strong summer. Since the end of May, it has rallied 9 percent and is just a 2 percent rally from an all-time high set on Jan. 29.
“If these two ETFs can take it one step further and move above their January highs and the IBB is very close to doing that, it’s going to give it even more momentum,” added Maley.
The IBB biotech ETF is still 2 percent lower than its 52-week highs set last week. It is up 10 percent for the year.
“If you see areas like the FANGS and some of these others see a downdraft, that money I think it will continue to flow into some of these health-care names,” Maley said, referring to Facebook, Amazon, Netflix and Google parent Alphabet.
Gina Sanchez, CEO of Chantico Global, sees a shift in the market that could be a tailwind for health-care stocks.
“What we’re seeing right now is seeing a general rotation, not just from technology to health care, but really from growthy stocks to sort of more robust stocks,” Sanchez told “Trading Nation.”
Value stocks often see a boost when investors anticipate any economic weakness. Value stocks prioritize cheaper valuation relative to the rest of the stock market, while growth stocks overlook high premiums in favor of expected profit and sales acceleration.
“Our view is that we’re kind of peaking out. The market is starting to get more defensive, it’s happening very subtly, but you’re seeing value start to become more attractive and you’re seeing staples, health care, these kinds of sectors are becoming very, very attractive,” said Sanchez.
The health-care sector is the third-best performer on the SP 500 this year, behind information technology and consumer discretionary.
Not a Scientific Survey. Results may not total 100% due to rounding.
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While Wall Street was putting out flames in tech earnings, one sector has had a stealth rally to lead the SP 500. One strategist says the group has more room to run.
Steve Chiavarone predicts stocks will fall 5 to 8 percent before summer ends.
DataTrek Research’s Nicholas Colas urges “extreme caution” as the SP 500 gets ready to change tech weightings.
DataTrek Research’s Nicholas Colas discusses a massive shift coming to the SP 500.
Gina Sanchez of Chantico Global and Chris Verrone of Strategas Research Partners discuss a possible market rotation toward value.
Trades to Watch
Gina Sanchez of Chantico Global says a North Korean attack, should one occur, isn’t likely to cause significant long-term market impact.
Boris Schlossberg of BK Asset Management says the ISM non-manufacturing report is key to watch ahead the jobs data released Friday.
Chad Morganlander of Washington Crossing Advisors is watching the dollar this week and expects it’ll begin to strengthen heading into the second half of the year.
Stacey Gilbert is the head of derivative strategy at Susquehanna.
Managing Director, ACG Analytics
Managing Director, Head of Technical Analysis, Evercore ISI
Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.
Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC’s “Squawk on the Street” (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.
In March 2018, Eisen was named co-anchor of CNBC’s “Power Lunch” (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.
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