You are correct to be skeptical of the market in view of the fact that the long term effects of the Asian situation are still unknown. However, as I stated in my previous message, when funds generate a significant amount of upward momentum, and this is accompanied by a technical breakout to the upside or other types of favorable charting patterns, it behooves us, as sector fund investors, to attempt to take advantage of that fund's current position where profits appears likely to be possible.
The Health Care fund possesses all of the above characteristics and requirements for a Buy signal. In addition, the fundamentals for the industry are extremely positive right now, and today's merger activity should only increase investor interest and improve the outlook for the sector. P/E Ratios, as you mentioned, are high only if earnings fail to support them, otherwise, the values are reasonable based on the present growth rates and the anticipated ones.
As I have stated ad nauseum in recent weeks, Asia will not be fixed today, next week, or next month. However, when considering Select Fund investments based on technical analysis and market considerations, we need to pick our spots based on proven indicators, and assume that they will point us in the right direction unless totally unforseen events disrupt the fundamental status of a particular industry or the market as a whole.
Bernie Kaplan |
