Trader’s Narrative

This is floating around the internet:

This morning I was awoken by my alarm clock powered by electricity generated by the public power monopoly regulated by the US department of energy. I then took a shower in the clean water provided by the municipal water utility. After that, I turned on the TV to one of the FCC regulated channels to see what the national weather service of the National Oceanographic and Atmospheric Administration determined the weather was going to be like using satellites designed, built, and launched by the National Aeronautics and Space Administration. I watched this while eating my breakfast of US Department of Agriculture inspected food and taking the drugs which have been determined as safe by the Food and Drug Administration.

At the appropriate time as regulated by the US congress and kept accurate by the National Institute of Standards and Technology and the US naval observatory, I get into my National Highway Traffic Safety Administration approved automobile and set out to work on the roads build by the local, state, and federal Departments of Transportation, possibly stopping to purchase additional fuel of a quality level determined by the Environmental Protection Agency, using legal tender issued by the Federal Reserve Bank. On the way out the door I deposit any mail I have to be sent out via the US Postal Service and drop the kids off at the public school.

After spending another day not being maimed or killed at work thanks to the workplace regulations imposed by the Department of Labor and the Occupational Safety and Health Administration, enjoying another two meals which again do not kill me because of the USDA, I drive my NHTSA car back home on the DOT roads, to my house which has not burned down in my absence because of the state and local building codes and fire marshal’s inspection, and which has not been plundered of all it’s valuables thanks to the local police department.

I then log on to the internet which was developed by the Defense Advanced Research Projects administration and post on freerepublic.com and Fox News forums about how socialism in medicine is bad because the government can’t do anything right.

Here are my own thoughts on this important matter:

WAKE UP AMERICA !! You are about to be plunged into socialized medicine - otherwise known as universal health care. This Marxist/Lennonist/Maoist ideology has ruined countless countries. For example, here’s a list of countries in which its citizens do not go bankrupt if they or their loved ones get sick:

Canada, Chile, Argentina, Brazil, Mexico, Peru, Panama, Uruguay, Trinidad & Tobago, Venezuela, Costa Rica, India, Israel, Singapore, Taiwan, Japan, Thailand, Finland, Germany, England, Austria, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Denmark, Estonia, France, Georgia, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Ukraine, Australia, and New Zealand.

That list reads like a horrific nightmare!

Who would ever imagine even visiting those hellish places? Never mind actually living there full time?

The United States is the only wealthy, industrialized nation that does not have a universal health care system. So let’s keep it that way! The US spends the highest per capita for health care costs and has the worst coverage and results. Obviously, you can not argue with success.

The best way to maintain that stellar status quo is to allow the debate to be framed and owned by the insurance companies and HMO’s which obviously only have your best interest in mind and have by some mysterious method been able to suppress the profit seeking motive which would cause them to have a conflict of interest between next month’s quarterly earnings and your grandmother’s hip replacement operation.

Just like your tenacity in saying no to the evil, soul sucking (albeit scientifically advanced and intuitive) metric system and sticking by the imperial system - along with the other two holdouts: Liberia & Myanmar - you will continue to be at the vanguard of human achievement by saying no to socialized health care. U. S. A !! U. S. A. !!

Based on the internal technicals that I watch, the healthcare sector is starting to look really interesting here for a long.

I’m referring to the healthcare sector as defined by the S&P Healthcare Index by the way (the exchange traded fund for the sector is XLV) This index has been in an intermediate downtrend since the middle of March 2006 but there are a number of signs that there is a reprieve around the corner.

For one, the number of 52-week lows in the sector now outnumber the number of 52-week highs - a sign in the past that things are really oversold. As well, the percentage of stocks above their moving averages within the sector is quite low. And finally, the Rydex mutual fund assets for this sector are showing that it is being shunned (to a similar degree that it was in October 2005) by the often wrong but never in doubt, mutual fund trading crowd.

Finally, the bullish percent index of the sector is near levels which have presaged a reversal in the past:

Of course, that doesn’t mean that one jumps in and buys here willy nilly. I’d look for the strongest stocks within the sector and wait for an appropriate entry. One tell, for example, would be when the bullish percent turns up.

You already know that I’m partial to Merck. I still like it because it has one of the better technical pictures from among the big pharma companies.

I would also keep an eye out on biotech because it has similar underlying technical behaviour: