Overtime

Mailtime

Good morning,

After a month off, we’re back with another edition of Mailtime!

You all were light on questions but heavy on the chart requests this month, and I love to see it. Thanks to everybody who participated and sent in a ticker.

Now let’s get into those requests!

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Questions

Is Bristol-Myers Squibb a sell here, and would you rotate into another healthcare stock if so?

There’s a lot to unpack here. First off, based on current trends, BMY is a sell if there ever was one. The stock collapsed to its lowest level since 2019 on Friday and is hitting all-time relative lows. That means, there is not a single point in the company’s history (back to 1977) that you could have bought it, still be long, and outperformed the S&P 500. It’s just been a bad stock.

There are two minor positives I can point to. One, as shown above, RSI-14 is positively diverging on the weekly chart. And two, the stock is still holding above its 2019 lows.

In the chart below, you can see the significance of the 2019 lows. If BMY were to break below $42, the stock would have almost no support until $31/share. So while I absolutely wouldn’t buy this stock here, if I was long, I might consider waiting for a break of $42 before throwing in the towel.

Finally, regardless of what happens with BMY, I would not be focused on the healthcare sector. As of Friday’s close, just 21% of the sector was above its 50-DMA, and only 58% of stocks were above their 200-days. Both of those readings are the worst of all 11 sectors and it suggests a lack of uptrends at the individual stock level. We want to increase our odds of success by fishing in the right ponds and right now, that just isn’t healthcare.

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Chart Requests

COST: Costco