Managing Editor\u2019s Note: <\/strong>Today, we’re hearing from our contributing editor, Mike Burnick, in his weekly Thursday feature.<\/p>\n Mike brings 30 plus years of hands-on market experience \u2014 from trading floors and research desks to running his own mutual fund as a registered investment advisor \u2014 and now leads multiple TradeSmith advisories including Constant Cash Flow, Infinite Income Loop, and Inside TradeSmith.<\/p>\n And he zeroes in on the beaten-down healthcare sector, explaining why its prolonged weakness may have quietly set up one of the more compelling low-risk, high-reward trade opportunities in the market right now.<\/p>\n Now, here\u2019s Mike\u2026\n<\/p>\n<\/div>\n Healthcare stocks were out of favor long before the recent market pullback. <\/p>\n\n\n\n But now the sector is oversold, sitting at a strong technical support level, and my favorite momentum indicators are signaling an upturn. <\/p>\n\n\n\n And you can add a convenient upside catalyst \u2026 healthcare is in a seasonal sweet spot for a new uptrend. <\/p>\n\n\n\n These are two of my favorite technical indicators I use to identify oversold markets or assets that are poised for a rebound: <\/p>\n\n\n\n I use these two powerful technical indicators in combination. <\/p>\n\n\n\n The Relative Strength Index (RSI)<\/strong> is a momentum indicator used to identify overbought and oversold conditions in stocks or other assets. <\/p>\n\n\n\n An RSI reading above 70 is considered overbought and may signal an upcoming downward reversal. But an RSI value below 30 signals oversold and can anticipate an upside reversal. <\/p>\n\n\n\n Meanwhile, Stochastic RSI<\/strong> simply measures where the current RSI value lies within its recent high-low range. In other words, it can smooth out RSI movements, often showing clearer turning points on a chart. <\/p>\n\n\n\n And right now, the S&P 500 Healthcare Sector ETF (XLV)<\/strong> has a double-barreled<\/em> buy signal with both RSI and Stochastic RSI anticipating a new uptrend. <\/p>\n\n\n\n In this TradeSmith technical chart above I\u2019ve added the RSI and Stochastic RSI indicators at bottom. <\/p>\n\n\n\n Simply click on the Indicators<\/em><\/strong> tab and scroll down to dozens of technical studies you can add. <\/p>\n\n\n\n You can see above that RSI is oversold, with a reading under 27. And Stochastic RSI is about to turn up from a very low level near zero. <\/p>\n\n\n\n That tells me XLV is extremely oversold, like a rubber band stretched to its limits, and the conditions are ripe for an upside reversal. <\/p>\n\n\n\n Also, shown on the price chart of XLV is our own TradeSmith Smart Moving Average<\/em> (dotted line<\/em>). This is our customized measure of any asset\u2019s long-term trend. <\/p>\n\n\n\n In this case, XLV is in an uptrend and is resting right on this strong price support level. <\/p>\n\n\n\n Taken together, these indicators tell me that XLV is: <\/p>\n\n\n\nThis Oversold Sector Has a Prescription for Profits<\/h2>\n\n\n
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