There’s A Strong Pattern Emerging Right Now in One Sector

Consider how we’ve gazed at the sky to learn. A study by Northern Arizona University estimated that astronomical observations go as far back as 30,000 years.

Our space-based learning goes beyond looking up. Early humans assorted rocks to plot star movements. Even our calendar can be traced to lessons learned from stars.

There’s A Strong Pattern Emerging Right Now in One Sector

Learning from patterns applies to markets and investors too. We can measure asset movements, draw knowledge from money flows, and more.

In fact, there’s a strong pattern emerging right now in one sector – health care.

But let’s start with this: health care has experienced huge selling recently. On Nov. 15, MAPsignals detected 70 discrete stocks that experienced heavy outflows.

Using the Health Care Select Sector SPDR Fund exchange-traded fund (XLV) as a proxy, you can see this level of selling has only been experienced a handful of times over the past four years:

All that red might make health care seem like a “hands off” sector right now. But I’m going to make the case that health care has better days ahead (because of a recognizable pattern).

Undefeated Signal

Going back to 2013 in MAPsignals data, I identified 16 prior instances when 70 or more health care stocks were sold aggressively in a day.

It’s a clear sign of the sector being oversold. And guess what? These moments tend to start bullish rallies:

Look at the winning percentages for one and two years out. That’s right – 100%. This is an undefeated signal!

Healthy Value

The money flow patterns are pretty clear. But let’s look at value. Is all this downward pressure on the sector a chance to buy in low before health care stocks go higher?

It might be because right now these stocks are a healthy value. The S&P 500 health care sector sports a low 0.9 PE/G ratio, putting it on par with other areas reflecting huge growth potential (small- and mid-cap stocks):

MAPsignals is all about spotting what other people miss. So, while many health care names are punished, we can assure you there will still be winners in the sector.

If you don’t believe me, believe Big Money – it’s betting on under-the-radar health care names now, while they’re oversold:

The market winners are easier to find with a Big Money MAP.

And if you want to cast a wider net, there are plenty of great health care ETFs out there with baskets of stocks that almost certainly will contain the sector winners. They include SPDR S&P Biotech ETF (XBI), iShares Biotechnology ETF (IBB), Vanguard Health Care Index Fund ETF (VHT), iShares U.S. Medical Devices ETF (IHI), and more.

The data makes it clear: health care won’t be oversold for long.

If you’re a serious investor, Registered Investment Advisor (RIA), or a money manager looking for hedge-fund quality research, get started with a MAP PRO subscription today.