Healthy Healthcare
Where is the strength? It will never
stand out better than in a market like the one we had Thursday.
If you trade long for the intermediate
term, this is not a time not to buy. It’s a time to stay in cash, maintaining a
watch list of stocks showing strength in the face of the present market.
Once the next rally emerges, some of those resilient issues will take off.Â
Shares in healthcare information
technology company Eclipsys
(
ECLP |
Quote |
Chart |
News |
PowerRating) surged 3 5/16, or 16.4%, to 23 1/2 on
1.3 million shares, twice its usual trade.Â
The top field of all charts in this
commentary uses a logarithmic price scale and displays a 50-day price average in
red. In cases where the displayed has traded long enough, the top field also
will exhibit a 200-day moving price average in black. In the second field, a
blue relative strength line represents the displayed security’s price
performance relative to the S&P 500. The third field displays vertical daily
volume bars in black with a 50-day moving average in blue for volume.
The stock ran into headwinds on Nov.
21 on news the Delray Beach, Fla.-based healthcare information technology
company had filed with federal regulators to sell 5 million common shares. For
that reason, I would take seriously possible resistance around 27 5/8 (see Point
A in above chart). I also want the stock’s relative strength line to
overcome its recent high (Point B).
The stock enjoys 90-plus scores for
three-, six- and 12-month relative strength. Eclipsys is traveling in good
company. Medical- and medical-technology-related industries are overwhelming the
winners circle.Â
All stocks, of course, are risky. On
any new trade, be sure to limit your position size and set a protective price
stop where you will sell your buy or cover your short to protect yourself
against severe losses. For an introduction to combining price stops with
position sizing, see my lesson,
Risky Business.