From Oct. 2002 it was tech stocks, middle of 2003 till the end of 03 it was precious metals stocks, 2004 till the beginning of 05 it was energy. Each one of these sectors had a parabolic rise then collapsed. Metals and energy had a period at the end where the stocks diverged from the commodity which was soon followed by a collapse of the underlying commodity. I realize that both oil and gold are still holding their 40 week moving average so they haven't really collapsed but the tech stocks have done nothing since the top in 03 same with metals. I agree that the general public is nowhere near jumping into the commodities bull market yet. However I do think that 9000 hedge funds are very quick to jump on the next trend. I think its the hedge fund interest that is moving each one of these markets. When they exit a particular sector it falls apart very quickly. I'm wondering if it might be a mistake to become too attached to any one sector. The PSAR has performed very well recently but I think it is going to be dependant on being in the sector that the hedge funds are in love with at the moment. I'm thinking the next sector might be health care. Anyone know of any health care stocks or ETF's?

Gary

Gary,

Here are the health care ETF's:

XLV
PPH
IYH
IXJ

And, of course, there are tons of health care stocks.

Larry

Any suggestions for a few of the better run health care companies?

Gary

The only one I own is Merck (MRK). But for an entirely different reason than what you’re considering. If you want to own health care because you think the hedge funds are going to run the sector up for awhile, I would think you would want to buy relative strength rather than whichever ones are the best managed. Management is critical, but it only pays off in the long run.

So you might want to get a copy of IBD and look for health care companies that have the highest relative strength rating. If you think the hedge funds are going to be buying the bio techs, that’s where you’re going to find lots of beta (volatility). And, in an uptrend, the bio techs will probably show the most relative strength within the sector.

Larry

Well so far BBH has done pretty good for me, but PPH has been a dud. Although it did bounce off the 200 DMA pretty strongly. If it closes below I'll sell it.

Gary

Per IBD, a few fundamentally superior medical stocks:

KOSP, rel strength 98 -- Medical-Ethical Drugs (same industry group as Merck)

DNA, rel strength 95 - - Medical-Genetics (disclosure: I own this one)

AMGN, rel strength 70 - Medical-Biomed/Biotech (just broke out – may want to wait)

However the ETF’s seems the safer way to play this. If you track ALL the sector ETF’s weekly SAR dots you can get an idea where the money’s flowing. If an ETF is trading above it’s 40 WMA and it’s SAR dot just turned bullish – buy!

Something like that oughta be boring but effective.

Yes? No? Maybe?

-ja