Identifying Upside Potential In XLV
by Mike Paulenoff
September 2, 2024 • 5:54 PM EDT
On August 15, with XLV (Healthcare SPDR, ETF) approaching Mike Paulenoff's target zone (noted in an April 18th post), Mike responded to an MPTrader member's question about whether it was "time to sell and find something with more potential?"
Mike wrote: "My short answer: no, it is not yet time to sell (although I will never dissuade anyone from taking profits and from ringing the cash register). My pattern and momentum work argue that upside potential extends from 156 to 161. That said, any bout of weakness that presses and closes beneath 148 will neutralize my current outlook. Bottom Line: Unless XLV reverses this week's upmove by declining beneath 148 (down about 2.5%), the current setup projects to a minimum upside target of 156 and a maximum target of 161... Last is 152.26 (8/15/24)..."
Fast-forward to this past Wednesday August 28: XLV had climbed to a new ATH of 156.44, which pushed the price structure into the lower boundary of Mike's optimal upside target zone of 156-161.
As Mike explained to members that day, with XLV trading at 155.79, "This also means it is time to be cautious about any forthcoming weakness that breaks and sustains below 154.00, the level that triggers an initial warning signal that the post-April upleg from 138.41 to 154.66 is exhausted and vulnerable to a meaningful correction."
XLV closed last week at higher ATHs of 157.20. From the time of Mike's original post to members on April 18 at 138.46, XLV has climbed 13.5%.
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