For many traders and active investors, sectors like health care
and utilities have been discussed recently as potential safe havens
during an April correction.
Depending on what happens over the balance of the month, this
may turn out to be true. In the short-term, however, the stocks of
the health care sector, at least, appear to offer more of the same
sort of potential risks and rewards as the rest of a stock market
that is very much in pullback mode.
And while not every health care stock mirrored the massive gap
), which dropped by more than 25% on Monday on news that the health
care plan servicers was among those to lose a major contract with
the state of Ohio, the selling in health care stocks - from care
plans to hospitals - has been widespread.
Taking a look at other stocks in the health care plan section of
the health care sector, we see further serious, short-term
weakness. Shares of
by more than 15% in Monday's trading, dropping to new, two-week
lows and finishing in oversold territory for the first time in a
month. Also moving lower in this group is
Wellcare Health Plans
), which pulled back by a relatively more modest, 7% ahead of
trading on Tuesday, nearing both new, 10-day lows and technically
Of these three stocks, the highest ratings go to Molina
Healthcare, which earned a ratings upgrade to 7 out of 10, one
point below our
"consider buying" category
. That said, MOH has also developed a significant, short-term edge
of well over two and a half percent, and likely has already
attracted the attention of traders and more active investors who
specialize in trading gaps (Want to be one of them?
to learn how to trade stock gaps.)
For their part, both Centene and Wellpoint have neutral ratings
of 6 out of 10. But CNC and WCG already have developed strong
positive edges in the short-term
, with Centene set to open with an edge comparable to that of
Molina Healthcare above, and Wellcare Health Plans has an edge of
more than one and a half percent.
And, as I mentioned, the selling is ubiquitous throughout the
health care sector. Hospital stocks like
Community Health Systems
) are trading oversold have closing lower above the 200-day moving
average for a third day in a row. Even a generic drugmaker like
) is selling the pressure, pulling back by more than two and a half
percent ahead of Tuesday's open, to finish short-term oversold for
a second day in a row.
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is Editor in Chief of TradingMarkets.com