Well being-care shares suffered a scare this week.
The XLV health-care sector ETF tumbled greater than 4% since Monday, its worst week of the yr and sending the group unfavorable for 2019.
Craig Johnson, chief market technician at Piper Jaffray, says the prognosis doesn’t look good.
“No query that the health-care sector has caught a chilly,” mentioned Johnson on CNBC’s “Buying and selling Nation” on Thursday. “The relative underperformance of about 950 foundation factors versus the S&P has been very painful during the last 30 days.”
“After we break down the chart right here, you’ll be able to see a transparent uptrend violation. You’ll be able to see the divergence between the RSI index versus value. It seems to be wish to us the subsequent help is available in at $85. Failure to carry there may be going to go away the subsequent help at $74,” mentioned Johnson.
“We’re not shopping for at this time limit. We’ll watch for the shakeout. We predict there’s extra room to the draw back,” mentioned Johnson.
Mark Tepper, president and CEO of Strategic Wealth Companions, says traders ought to maintain regular within the face of elevated near-term headwinds.
“Lengthy-term I like them. Fairly frankly that is all political. That is 100% a response to the opportunity of Medicare for All turning into a actuality which might crush the sector,” Tepper mentioned on “Buying and selling Nation” on Thursday.
Democratic presidential candidates Bernie Sanders, Elizabeth Warren and Kamala Harris have voiced help for Medicare for All laws that would supply common well being protection, whereas President Donald Trump has pledged to handle well being care after the 2020 presidential election.
There are a number of Medicare for All proposals circulating in Congress, a few of which might mainly abolish personal insurance coverage whereas others would merely create a public possibility and go away personal plans largely in place. Nonetheless, the business is frightened. On Tuesday, UnitedHealth CEO David Wichmann mentioned Medicare for All would “destabilize the nation’s well being system.”
Whereas the business could also be frightened, Tepper instructed the issues about Medicare for All are overblown.
“I do not assume Medicare for All occurs so I feel there’s an enormous alternative right here,” mentioned Tepper. “Within the quick run I do assume there’s political headwinds however as a long-term investor I feel you’ve got the chance to get in at a superb value level now.”