What We're Reading

If you're like me, we're all wondering what is going to occur with ACA (Obamacare) once Donald Trump takes office and the charts from Healthcare (XLV) and Biotech (XBI) certainly reflect the concern.  With the proposed 21st Century Cures Act, due for Senate passage this week, be the $5Billion dollar "game changer"  the sector is waiting for...........or will we be waiting until Congress replaces the unpopular components of Obamacare to see an impact in stock price?

Repealing or replacing Obamacare is fraught with at least six major issues, but perhaps the most significant one is a lack of decisiveness within the Republican party itself. What would Obamacare be replaced with, and how would that change be implemented?

Interestingly, there are at least seven Republican plans that have been tabled to replace Obamacare. Within that group, two of the more prominent ones come from Georgia Rep. Tom Price and House Speaker Paul Ryan.

Tom Price, who is Trump’s pick as the incoming secretary for

The stock market continues to weaken, as evidenced by these ETF charts.    If you zero in on a sector you wish to short, I would bear in mind that ETFs are comprised of market leaders.  I would look for names "outside" of the ETF components; consider them leaders and you want the weaklings to short.

The reasons for weakness are numerous. 

Consider the election weight (a Trump win would weigh on equities but Clinton weighs on pharma pricing).  Then there are flat-to-dropping sales.  Of course the USD movement (up will weigh on commodities and large caps with overseas exposure).  Then there's those who feel we are already at or above maximum value and they're not buying here.  They're hedged, short some and long financials ahead of the Fed rate hike.  Then there's that Fed hike itself.  High dividend is flushing down the toilet (SDY) in September.  Overseas weakness with China not helping boost confidence for demand.  And we also have more failure at the OPEC talks with no offer from o

Damn ugly, especially the high volume selling in healthcare and biotech.

Shorted XLV.  Stop on a close above the 50d.  Suggested previously here

Target below the 200d.  I like the risk/reward