Many Healthcare stocks and ETFs have gotten hit hard over the last few weeks, including the Health Care Select Sector SPDR ETF (XLV) , iShares U.S. Healthcare Providers ETF (IHF) and the iShares U.S. Pharmaceuticals ETF (IHE) , which all remain noticeably below their 2024 highs. The iShares U.S. Medical Devices ETF (IHI) took a hit in December too, but the damage it incurred was minimal by comparison. The ETF remains close to its all-time high. Some of its components are even closer, including Intuitive Surgical (ISRG) . ISRG has been trending higher since bottoming in April. The stock broke out from two bullish patterns in May and hit both of the targets we had at the time. After the August volatility, ISRG re-established its uptrend and took advantage of the earnings-induced bullish pattern breakout this past October, hitting another upside objective. Since the middle of November, ISRG has been constructing yet another potential bullish formation. It’s not completed yet, but an eventual breakout above the $550 zone would trigger an upside target near $580. It’s never easy to know when a dip will turn into a more severe sell-off. For hundreds of stocks that have declined over the last six weeks, this has become crystal clear. For ISRG, specifically, we should watch how it does vs. its 50-day moving average from here. Since reclaiming the line in early 2024, the stock has taken off. Along the way, ISRG has pulled back on various occasions and actually sliced back under the line a handful of times. Sometimes the breach was minimal and brief; other times, ISRG spent multiple weeks battling the line before it finally broke back above it once again. It last undercut the 50-DMA in the second half of December, and it’s been flirting with it ever since. If traders once again leverage this dip under the 50-day line, then the pattern profiled above finally could be completed, and the upside target could become a reality. A lot of this will have to do with how ISRG reacts after reporting its fourth-quarter earnings in two weeks. Charts will never tell us how a company’s financials will look, but understanding the stock’s recent behavior “around” past reports is helpful. While the focus always is on the initial reaction the day (or even minutes) after a company reports, the behavior over the following weeks is much more revealing – after investors review the report and listen to the company’s post earnings call, etc. And over the last year, it’s clear that ISRG has performed well in the three months between earnings reports no matter what the stock did the next day. This, too, is a trend that we should monitor – if it changes, it will tell us that investors’ feeling about ISRG is changing, too. — Frank Cappelleri Founder: https://cappthesis.com DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
