From the desk of Steve Strazza @Sstrazza
Thanks to everyone who responded to this week’s Mystery Chart. Responses were somewhat mixed. It was a daily chart of the iShares Medical Devices ETF $IHI.
What we really wanted to know is whether or not investors are buying these kinds of bullish continuation patterns right now. Many alluded to the underlying trend being higher but still wanted to wait for the flag pattern to resolve before taking action.
This is a prudent approach and we’re looking at the chart in a similar light. With that said, we’re also viewing setups like this within the context of what is going on in other areas of the market. In other words, as more and more of these patterns resolve to the upside, which they are, the higher the likelihood is that others will follow their course.
In this post, we’ll walk through our top-down approach to highlight why we like Medical Devices right now and then drill into some of our favorite setups as a way to express our bullish thesis.