Health-care stocks are back in favor and these 3 names could lead the rally, according to the charts
I am a big fan of routines, as I've found that many poor investment decisions come from an undisciplined use of our time as investors. For me, a weekly scan for stocks making new three-month highs and lows has become a vital part of my own toolkit, as it helps me identify new leadership themes a little earlier on in the trend. I was surprised this week to note the large number of health-care names represented on the new highs list. And it wasn't just one group or theme within the sector, but rather a broader advance including biotech, medical supplies, medical equipment, and even pharmaceuticals. Here are three stocks in the health-care sector that could provide further upside potential based on their improving technical characteristics. 1. Boston Scientific (BSX) BSX is demonstrating a classic "big base breakout" pattern, having broken above price resistance around $55 in November 2023. This level was first reached in May 2023, after an 11-month rally from a June 2022 low around $35. But since first reaching that level in May of last year, the chart has been decidedly sideways, representing an equilibrium between buyers and sellers. That all changed in November, when BSX finally broke above this well-established resistance level, pushing into the upper $50s this month. Using the height of the basing pattern projects a minimum upside target around $52, but upside potential could be much greater given the strong momentum characteristics. 2. Stryker Corp. (SYK) Stryker is another stock in the medical equipment group and looks very much like BSX before the recent price breakout. Here we see the April 2023 high lines up well with highs in June, July, and September of this year. Just this week, we're seeing SYK threaten a new 52-week high, which would propel the stock above its previous resistance and confirm another big base breakout. The height of the recent basing pattern suggests an upside target around $372, which would mean another 22% above current levels. And as long as SYK can remain above the recent breakout level around $300-305, the chart will remain in a bullish configuration. 3. Amgen, Inc. (AMGN) While the broader biotechnology group was in a well-defined downtrend into the October 2022 market low, Amgen actually bottomed in June before finishing 2023 in a position of strength. Recent price action has pushed AMGN to a new swing high, completing a classic "cup and handle" pattern. From November 2022 to June 2023, AMGN dropped from around $295 to $215, shedding about 27% of its value in just seven months. But since June of last year, the stock has been in a fairly consistent uptrend of higher highs and higher lows, leading to a retest of the late 2022 high in October 2023. A cup and handle pattern has a broad bottoming pattern (the "cup") followed by a shallower pullback (the "handle") which leads the price back up to a major resistance level. Once AMGN was able to push above $295, that completed the pattern and confirmed a new bullish trend for the stock. With any breakouts like this one, it's important to watch the previous resistance level which often serves as price support going forward. As long as AMGN remains above $290, we see this as a strong chart getting stronger. -David Keller https://www.marketmisbehavior.com DISCLOSURES: (None) THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.