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Posted January 30, 2026 at 4:15 am
1/ Healthcare Below Trend
2/ Emerging Markets Ex-China
3/ Solar Industry – Well Defined Level
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Healthcare Below Trend
The defensive healthcare sector has come back to life in recent months. After struggling for much of 2025, the sector printed a new all-time closing high in early January. Despite absolute prices reaching new highs, the relative strength chart – which compares the healthcare sector to the S&P 500 Index – continues to struggle, and now finds itself once again trading below a relative 200-day moving average.
This isn’t a market where defensive sectors are outperforming. Despite the constructive price action on the absolute chart – investors would have been better off owning more cyclical stocks the last 12-months. If you are adding a Healthcare specific satellite position to your portfolio, the sector may continue to detract from performance in the short-term. Although, when the cycle turns, owning a defensive sector may provide some level of downside protection. The takeaway here is that the market is still telling us it is not the time to own defensive stocks. Evidence points in favor of risk-on for the time being.
Emerging Markets Ex-China
Emerging market stocks are making headlines this week – the asset class is printing new highs and benefiting from a declining US Dollar. When most people think of Emerging Markets, they think China – but it’s countries like India, South Korea, Peru, Greece, and South Africa that are the real outperformers. The below chart displays the price ratio of Emerging Markets Ex. China vs. Emerging Markets. The ratio printed new highs this week, breaking out from a yearlong basing pattern. It’s not just China that’s working – emerging economies of all sizes are participating in this rally!
Solar Industry – Well Defined Level
As a technician – I love defined price levels. They help us manage risk and push us to change our minds if proven wrong. The below Solar industry index is trading within a very defined price range. If you’re bullish on this industry – you’ll want to see the chart trade >60. Until that level is successfully breached, the path of least resistance is lower.
The industry traded sideways for 3+ years. During that period, the 60-level behaved as support several times. Even with the industry doubling off the April 2025 lows, there’s still a lot of supply to work through. For me, it makes sense to stay neutral until the price chart tells us otherwise.
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Originally posted 29th January 2026
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