The Health Care sector started rallying in early November 2023, at about the same time the S&P 500 ($SPX) rallied. The AI buzz may have buried the rally in Health Care stocks but, in early 2024 when technology stocks pulled back, the areas that were rallying, such as Health Care, gained investor attention.
The Bullish 50/200-day MA Crossovers scan on the StockCharts Sample Scan Library revealed three healthcare stocks worth exploring. They are as follows:
Abbott Laboratories, Inc. (ABT)BioMarin Pharmaceutical, Inc. (BMRN)DexCom Inc. (DXCM)
Let’s look at these charts in more detail to identify investment opportunities.
Abbott Laboratories, Inc.
Looking at a 5-year weekly chart of Abbott Laboratories (see chart on left), the stock has seen a healthy bullish rally from 2017 till the end of 2021. It fell below its 40-week simple moving average (SMA) a few times, but recovered and continued moving higher. Note that the 40-week SMA translates to the 200-day SMA.
CHART 1. ABBOTT LABORATORIES COULD BREAK OUT ABOVE ITS TRADING RANGE. After trading sideways for a few years, ABT stock may break out to the upside and move toward its all-time high of $137.50.Chart source: StockChartsACP. For educational purposes.
After 2021, the trend reversed with a series of lower highs and lower lows and a lot of choppy movement. Since then, the stock has been moving sideways. ABT’s relative performance with respect to the Health Care sector, represented by the Health Care Select Sector SPDR ETF (XLV), has been in positive territory since 2017. In the chart above, it’s at 127.74%.
Moving to the daily chart of ABT on the right side, you can see the Golden Cross or the 50-day SMA crossing above the 200-day SMA. The relative strength index (RSI) is at around 78, which indicates the stock is in overbought territory. It could stay there for an extended period of time, as it did since November 2023, when the stock was trading above its 200-day SMA.
If ABT breaks above $114 on strong momentum, the stock could reach its all-time high of $137.
BioMarin Pharmaceutical, Inc. (BMRN)
This stock has been choppy since 2015, yet its relative performance with respect to XLV increased in strength (see weekly chart on left).
CHART 2. CHOPPY MOVEMENT IN BIOMARIN PHARMACEUTICALS. The stock appears to be consolidating in spite of the Golden Cross. Relative performance with respect to XLV is strong. Any sign of the stock breaking out of its consolidation could make it a strong addition to your portfolio.Chart source: StockChartsACP. For educational purposes.
The daily chart on the right shows the Golden Cross, yet the stock is consolidating. There must be a reversal and a break above the $99 resistance level before considering opening a long position in this stock. The RSI is at around 50. It could reverse from here and move higher if BMRN reverses and moves above its overhead resistance.
DexCom Inc. (DXCM)
This stock may be one you don’t hear about much, but it’s worth analyzing. On the weekly chart (left side), the stock looks similar to ABT’s. It has trended higher since 2017 and is now consolidating. Its relative performance against XLV is trending higher after moving sideways for several years.
CHART 3. DEXCOM COULD MOVE OUT OF ITS TRADING RANGE. The Golden Cross is in its infancy and the RSI on the daily chart is below 70. A more prominent Golden Cross and an RSI upward move could bring this stock out of its consolidation period and toward its all-time high.Chart source: StockChartsACP. For educational purposes.
On the daily chart (right side), DXCM has moved well above its October bottom of $75. The Golden Cross is in its infancy, and the RSI is below 70 and is turning lower. If the 50-day SMA continues to move above the 200-day SMA and the RSI reverses and crosses above 70, this stock could move higher and hit its 2021 high of around $164.
How To Scan for Stocks Flashing a Golden Cross
You can scan for Bullish 50/200-day MA Crossovers from the StockCharts Sample Scan Library.
From Your Dashboard or Charts & Tools tab, scroll down to the Sample Scan Library to identify the scan.Run the scan. It will filter out all the stocks and ETFs that meet the scan criteria.
The Bottom Line
Abbott Laboratories, BioMarin, and DexCom are three healthcare stocks that could shine in 2024. The Golden Cross in all three is in its early stages. If the crossover continues and there’s follow-through momentum in any of these stocks’ prices, it could be a good addition to your portfolio. But your investment may not be a “set and forget” one. Any signs of the Golden Cross not continuing would signal to either exit your position or not enter one.
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.