XLV - a long-lasting top may be in place and correction is far from over

XLV ( Health Care Select Sector SPDR ETF ) is the largest healthcare ETF by assets. XLV allocates about two-thirds of its combined weight to pharmaceuticals and biotechnology stocks. Main holdings are JNJ, UNH, PFE, MCK, ABBV, AMGN, ABT, MDT, LLY, TMO.

XLV has a look of a completed five wave rally off the low in 2009. That implies that from here we may see a large corrective move down. The first two high probability targets are 68.80 and 62.70. Even though there is a chance that it may stretch to one more high but risks are highs that it has topped so I would not touch it here. The wave ( C ) of ( 5 ) has tagged a very common 223.6% extension of the wave ( A ) of ( 5 ). And the whole (A)-(B)-(C) structure has the right look to be the wave ( 5 ) up.

If I am right about calling XLV having topped we should focus on the two most common retracement levels for the whole rally off the low at 21.63 made in March 2009. Those are 38.2% retracement ( 67.50 ) and 41.4% retracement ( 65.15 ).

XLV - Daily chart updated on 6 January 2019

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