When it comes to macro-level trends set to make a massive impact on the financial markets, aging populations around the globe are near the top of the list. This one factor will have widespread influence on risk tolerance, asset allocation, and personal goals outside of investing, which will likely be some of the largest catalysts for change in the coming decades.
Parallel to these factors is the underlying health and wellbeing of these investors, which will also coincide with increased demand on the global health care sector for years to come. In this article, we’ll take a look at three charts suggesting that now could be an ideal time to increase exposure to this important segment of the financial markets.
iShares Global Healthcare ETF (IXJ)
The iShares Worldwide Healthcare ETF is one of the most popular exchange-traded funds used by investors seeking global exposure to health care companies (IXJ).As the name implies, this fund invests in pharmaceutical, biotech, and medical device firms from throughout the globe.
Looking at the multi-year weekly chart below, a well-defined symmetrical triangle has emerged. The fund’s positive price action over the last several weeks has propelled it beyond the resistance level, and the breakout now signals that target prices will be established above $71, which is equal to the entry point plus the pattern’s height. Stop-loss orders will most likely be set below the lower trendline in the event of a significant move in the underlying fundamentals.
Johnson & Johnson (JNJ)
Johnson & Johnson (JNJ) is one of the world’s leading healthcare companies, with 135,000 workers serving more than 1 billion people every day. The corporation has significant market share in the consumer, pharmaceutical, and medical device sectors. In reality, the corporation has 26 platforms/products with revenues of more than $1 billion in 2018.
The weekly chart below shows that the price is trading inside an established channel pattern. The eight-year graphic clearly shows where traders’ buy and sell orders will be placed. Based on the recent drop into the lower trendline, it looks that now may be the moment for technical analysts to consider buying since the company is giving a risk-to-reward ratio that is only seen every couple of years. Depending on risk tolerance, stop-loss orders will most likely be put below the 50-week ($134.13) or 200-week ($118.10) moving averages.
Abbott Laboratories (ABT)
Abbott Laboratories is another world-leading health-care company that is popular among active traders (ABT).The corporation, which was founded in 1888, is a global leader in finding, developing, producing, and distributing health-related goods.
Looking at the weekly chart, you’ll observe that the stock is trading inside a narrow upward-sloping trading range with little signals of reversal. Depending on their investment horizon and risk tolerance, traders will likely attempt to build a position as near to the lower trendline as feasible and put stop-losses below the long-term weekly averages.
The Bottom Line
The underlying shifts in global demography are establishing one of the most powerful macro-level investing themes in history. While the weekly charts plainly demonstrate that the bulls have the upper hand, the patterns show no indications of stopping or reversing. Clearly defined trendlines are also producing attractive risk-to-reward situations for technical analysts, indicating unambiguous levels for the placement of buy and stop orders.
Casey Murphy had no position in any of the securities mentioned at the time of publication.
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