It has been an excellent year for health care ETFs and the SPDR Pharmaceuticals ETF (XPH) is no exception. The $579.9 million XPH is an equal-weight play, eschewing large weightings to blue-chip pharma names like Johnson & Johnson (JNJ) and Pfizer (PFE) in favor of a more balanced approach.
That approach has worked this year as XPH is up nearly 39%. XPH also recently touched a fresh all-time high. Interestingly, the ETF is up half a percent in midday trading Tuesday on volume that is already 7.5 times the daily average.
That is not the first time in recent weeks that XPH has seen unusually large volume. Earlier this month, the ETF saw well above average turnover in five straight sessions. Indicating that it was buyers stepping into the ETF, XPH had $524 million in assets on October 11, meanings its assets under management tally has jumped about 10% in less than two weeks. [Buyers Stepped Into Pharma ETF This Week]
However, nothing moves up in a straight line and some traders believe XPH is poised for a near-term pullback that could present traders with a buying opportunity.
“The price has lost a bit of momentum over the past few weeks, as $XPH looks to be forming a late stage base at the highs. A late-stage base is one that can easily move higher because there is so much momentum on the weekly and daily charts. However, this sort of base is better suited for the agile swing trader rather than intermediate-term position trader, because the trend might not have much left in the tank,” said Deron Wagner of Morpheus Trading Group.
It is accurate to say that XPH, although the ETF is rising to new highs, has lost some momentum. From May 1 to August 1, the ETF gained 20%, but since early August, XPH has traded in a tight range and is up just 2%. [Obamacare Could Boost These ETFs]
“XPH may need another week or two of consolidation around $78 (due to last Friday’s false breakout attempt). We typically see false breakouts pullback for three to five days before reversing higher, but if the market retraces off the highs, we could see a deeper pullback to the 50-day moving average (around $77),” said Wagner.
SPDR S&P Pharmaceuticals ETF