You know what is not a characteristic of a downtrend? All-time highs!
On Friday afternoon, the Medical Equipment Index (NYSEArca: IHI) went out at new all-time weekly closing highs relative to the S&P 500.
We look to relative strength as a leading or coincident indicator for stocks. This sector’s behavior is no different.
Here is a weekly chart of the Medical Equipment Index fund vs. the S&P 500 going out at new all-time highs:
To give you better perspective, here is the IHI itself. And then below it, the relative strength we’ve seen the past few months.
With lower lows in the index itself into the end of the year, the sector index was already making a higher low relative to the rest of the market:
When it comes to this group at least, we want to be buying the strongest names.
Have a great week.
To wise trading,
Editor, Big Market Trends