The big theme this week is textbook retests. We’re seeing this kind of price action across the board right now.
One that stands out is the large cap healthcare index.
The healthcare sector is finding its footing after experiencing significant downside pressure in recent weeks.
Price is currently testing a critical level of former resistance marked by a shelf of prior cycle highs.
With so much price memory here, this area represents a logical level for XLV to catch a bid.
And so far it is. The bulls are digging in and flipping this old resistance zone into support.
The line in the sand is $140. As long as XLV holds above this level, I’ll give the bulls the benefit of the doubt. This area offers a great place for a defined risk entry for a potential bounce.
I’m also watching how the smallest and most volatile stocks, especially biotech, respond in the days ahead. If we see a general bid, these names could offer significant upside potential.
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