Here’s a ‘solid contrarian idea’ for 2024, according to BTIG’s Krinsky

But let’s not get carried away. Krinsky adds he doesn’t see another big upside move much beyond that level and if the tide turns he warily eyes initial support at 4,600, and with 4,200-4,300 as major long-term support.

Furthermore, he spies some concerning issues, such as an uptick in the CBOE VIX index
VIX
before the Christmas break, even as the market gained ground.

The VIX, an option-based gauge of expected S&P 500 volatility, tends to fall when the market goes up, so its rise may indicate some wariness bubbling below the surface.

It’s a scenario similar to the market shakeouts witnessed in January 2018 and September 2020, Krinsky notes, and comes as broad market sentiment is chipper with investors’ “positioning back near multi-year highs.”

With this in mind, Krinsky appears wary of chasing sectors of the market that have already been big winners and has his sights on a sector he considers “a solid contrarian idea”: healthcare.

As the chart below shows, the healthcare sector has meandered within a trading range for about two and a half years.

“An upside resolution from this range in ’24 could be powerful and would suggest relative outperformance after testing 2021 lows,” says Krinsky. “HC has only been the best performing sector in a year once over the last 15 years (2018), and while we can’t say it will be the best in 2024, we do think it is worth a strong look for relative outperformance.”

Within the sector, Krinksy notes that smaller companies, as represented by the Invesco S&P SmallCap Health Care ETF
PSCH,
has begun to break a nearly three-year downtrend relative to bigger companies, the Health Care Select Sector SPDR ETF
XLV.

“Much like the broad market, we expect small-cap [to do better than] large-cap initially in ’24,” he says.

Those large-cap companies with what Krinsky considers are “constructive” charts but for which they do not have a rating include: AbbVie
ABBV,
+0.17%,
Danaher
DHR,
+0.63%,
IQVIA
IQV,
+0.39%,
and Laboratory Corp. of America
LH,
+0.58%.

Small-caps with constructive charts and no BTIG rating include: Alkermes
ALKS,
+0.68%,
Ensign
ENSG,
+0.07%,
Fortrea
FTRE,
+0.23%,
and Integer
ITGR,
-0.11%.

Companies with constructive charts and a BTIG buy rating include in Biotech: Ambrix Biopharma
AMAM,
+1.10%,
Apogee Therapeutics
APGE,
-4.41%,
Biohaven
BHVN,
+1.11%,
and Exelixis
EXEL,
+0.12%.

In MedTech: Abbott Laboratories
ABT,
+0.51%,
Boston Scientific
BSX,
+0.05%,
Inari Medical 
NARI,
+2.35%,
and Stryker
SYK,
-0.02%.
In Life Sciences: Castle Biosciences
CSTL,
+0.91%,
Natera
NTRA,
+0.08%,
NeoGenomics
NEO,
-0.44%,
and SOPHiA GENETICS
SOPH,
+2.31%.

In IT & Digital Health: Apollo Medical 
AMEH,
+1.75%,
Progyny
PGNY,
-0.42%,
Sharecare
SHCR,
-2.78%,
and Simulations Plus
SLP,
-0.74%.

Finally, Krinsky looked at two of the best known healthcare companies: Pfizer
PFE,
+0.70%
and Eli Lilly
LLY,
+1.90%.
Pfizer has had a rotten 2023, down 45% CHECK and is danger of falling for eight months in a row.

However, it’s share price is now in an area offering what Krinsky considers is “major support” and “while it’s not in the Dow any longer, if looking for a contrarian idea similar to the ‘Dogs of the Dow’, this one fits the bill.

Eli Lilly on the other hand doesn’t look promising from a technical perspective, says Krinsky: “The stock is up seven years in a row and 12 of the last 13. Feels a bit parabolic lately with weekly momentum rolling over as the stock breaks its medium-term uptrend.”

Markets

U.S. stock-index futures
ES00,
-0.01%

YM00,
-0.16%

NQ00,
+0.20%
are mixed as benchmark Treasury yields
BX:TMUBMUSD10Y
nudge higher. The dollar
DXY
is softer, while oil prices
CL.1,
-1.15%
dip and gold
GC00,
-0.28%
trades above $2,075 an ounce.

Key asset performance	Last	5d	1m	YTD	1y
S&P 500	4,781.58	1.77%	5.08%	24.54%	26.39%
Nasdaq Composite	15,099.18	2.17%	5.90%	44.26%	47.84%
10 year Treasury	3.819	-6.80	-51.39	-6.03	-0.10
Gold	2,087.30	1.44%	1.52%	14.05%	14.57%
Oil	73.67	-0.35%	-2.57%	-8.50%	-6.40%
Data: MarketWatch. Treasury yields change expressed in basis points

For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

The buzz

U.S. economic data due on Thursday include the weekly initial jobless benefit claims report, alongside November readings of the trade balance in goods, retail and wholesale inventories, all published at 8:30 a.m. Eastern.

Pending home sales for November will be released at 10 a.m.

Apple
AAPL,
+0.05%
is resuming sales of its smartwatches after court pauses FTC import ban.

The U.S. Treasury will auction $40 billion of 7-year notes at 1 p.m.

The Japanese yen
USDJPY,
-0.77%
approached the 140 to the dollar level as investors eyed a shift to tighter policy by the Bank of Japan in 2024 and the cutting of interest rates by the Federal Reserve.

Best of the web

‘Shakeout has begun’ after $5bn streaming loss for Netflix rivals.

The 10 days that moved the market most in 2023.

How electric vehicles are losing momentum with U.S. buyers, in charts.

The chart

If calculating consumers’ Grinch levels is a good indicator of household spending then the table below from Ed Hyman, chairman of Evercore ISI may be a bit troubling. It shows that Christmas Tree sales slowed to growth of just 4% for the festive season. “That’s very slow for a nominal reading and probably negative in real terms,” he says.

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.

Ticker	Security name
TSLA, +1.88%	Tesla
GME, +5.82%	GameStop
NIO, -2.47%	NIO ADR
NVDA, +0.28%	Nvidia
TAI, +25.00%	Talmora Diamond
MARA, +15.24%	Marathon Digital
AMC, +0.82%	AMC Entertainment
AAPL, +0.05%	Apple
BABA, +0.34%	Alibaba ADR
CING, +101.52%	Cingulate

Random reads

McLegend.

The TV letdowns of 2023.

The Godmother of Bloodsucking Insects.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.