Excellent! Health Care Stocks Primed for a Comeback, Says Montgomery Burns

A Dismal May? Bah Humbug!

Blast it all! This May has been quite the disappointment. While that infernal S&P 500 pranced around with a 6% gain my Health Care Select Sector SPDR Fund (XLV) languished plummeting over 5%. A truly ghastly underperformance of 11%! Smithers remind me to dock someone's pay for this… perhaps Lenny? Yes Lenny. It appears this was XLV's worst relative monthly performance since 1898… or was it 1998? Either way far too recent for my liking! But fret not my precious minions for there may be light at the end of this gloomy tunnel.

Support Lines? More Like Life Lines!

Fear not for after this recent unpleasantness XLV has stumbled upon not one but *two* long term support levels! The first a rising trendline stretching back to the 2009 financial crisis – a mere blip on my radar of course – and extending through the COVID debacle. And the second? A cluster of lows from 2021 2022 and 2023 in the low 120s. These converging lines Smithers are like a safety net woven from the finest… well probably not *finest* given the current state of affairs. But a net nonetheless! They could very well help XLV bounce back in June. Excellent!

The Big Three: Not Just a Law Firm!

Now pay attention you simpering fools! XLV is propped up by its three largest holdings: Eli Lilly (LLY) Johnson & Johnson (JNJ) and AbbVie (ABBV). Together they account for nearly 27% of the fund. So if these corporate titans can't rally XLV will continue its… *shudders*… struggle. Let's see if we can squeeze some profits out of these laggards. Release the hounds Smithers! No wait wrong department.

Eli Lilly: The Sleeping Giant?

Eli Lilly with its hefty 12% weighting in XLV has taken quite a tumble since its all time high in August of this year. Down 30% from that peak! But as the charts suggest there have been rallies and declines within a downward sloping trading channel. Intriguing. It seems the best time to buy LLY is after a substantial drop. And guess what? It just fell another 20% recently! Add to that the weekly Williams %R indicator is emerging from oversold conditions. These are promising developments indeed. It appears LLY has logged gains in six of the last seven trading days. Could this be a sign of things to come? I certainly hope so. Release the robotic Richard Simmons!

Johnson & Johnson and AbbVie: Can They Dance?

Johnson & Johnson (7.7% weight) has been trending lower since 2022 while AbbVie (6.8%) has been on an uptrend for the last few years. However like Eli Lilly they've experienced swings within their respective trading channels. And with both having sold off from their 2025 highs now might be the perfect time for a bounce. These underachievers need to pull their weight! Smithers make a note: increased dividends for those who perform coal for those who don't. And by coal I mean *actual* coal.

Rotation Rotation Rotation!

From my vast almost eternal perspective rotation is crucial for sustained market uptrends. So when (not if) the air comes out of the overextended sectors capital may just find its way to these underperforming health care stocks. A glorious opportunity for profit! And profit Smithers is what makes the world go 'round. Now if you'll excuse me I have a pressing engagement with my collection of priceless Fabergé eggs. Excellent!