US Breadth Update – 2016 11 01

US breadth has deteriorated for the worst. The number of stocks breaking down has increased significantly, while stocks breaking out are almost non-existent. This is a sign that the stocks that are first to break down have legs. Healthcare is one of the weakest sector as discussed in our sector move regarding Obamacare.

US Breadth.PNG


Sectoral Move: Obamacare

Obamacare has not been working. Insurers have pulled out of the exchanges and premiums are expected to keep rising (22% in 2017). Cost of care has reached exorbitant levels. Medical equipment companies were left to charge exorbitant prices. While some hospitals are at bankruptcy valuations, the other sectors (Medical equipment and IT remain expensive).

Sector/Industry Narrative/ Theme Stocks
Hospitals Failure of Obamacare ACHC, ADPT, CYH
Drug Pharmacies DPLO, MCK
Medical Equipment ABMD, AIRM, CYNO, EW, NUVA, TFX, ZBH