Healthcare's drop today is being led by underperformance in RMD, HUM, VTRS, and UNH 1.80% , the latter representing the 2nd largest weighting within XLV 0.76%  at 8.75%, and Healthcare itself is the 2nd largest sector by market capitalization within the SPX at roughly 12.5%. Thus, a -4.5% drop in UNH 1.80%  is normally important and something to keep an eye on given its weighting within Healthcare as well as its influence on SPX. Today's drop is happening on above-average volume and marks a continuation lower following UNH's peak last October within striking distance of former all-time high territory. That area near $560 proved to be strong resistance, and it's not wrong to say that UNH has slowly but surely been suffering some technical weakening in momentum over the last four months, as prices have been sliding lower. The first warning sign happened in January following UNH 1.80% 's break of uptrend line support near $525, and its rebound attempt failed to make any upside headway to rectify this negative development, bouncing to test the area of the uptrend line before rolling over this past week. At current levels, a test of $479 from late January looks probable, and this represents the first meaningful area of downside support. Any break of that level would have near-term bearish consequences, technically speaking and would be thought to potentially lead UNH down to test the more meaningful area of 2-year consolidation support near $445. At present, the weakening in the stock in recent months has resulted in shares plunging back into this larger multi-year consolidation after a failed push to new high territory. While this larger two-year consolidation does remain within a larger long-term bullish uptrend, it has necessitated a more neutral view on the stock in the short run, and today's downside volume on the selling makes buying dips likely something that will require patience. Overall, additional sideways churning and/or minor downside selling pressure look more likely rather than an immediate snapback technically. To have a very bullish opinion on UNH technically it will be required that UNH recoup its selling and rise back above $540 which seems like a "tall order" in the weeks/months to come. However, that will be the technical sign that intermediate-term gains can happen. Until then, it's wise to keep UNH at a smaller percentage holding as opposed to an overweight, until this can begin to stabilize and turn back higher. Bottom line, the technical view is not bearish on UNH, but rather one that will require patience, as UNH has entered the so-called "Sleeper" state for the time being.

Today's minor decline in SPX and QQQ yet again has been largely disguised by the degree of weakness in large-cap Technology, and to a certain degree, large-cap Healthcare, with UNH 1.80%  leading losses, but on an Equal-weighted basis, the market is actually positive by +0.28% (RSP 1.43% ) as sectors like Industrials, Discretionary, Financials and REITS are all making a strong showing. More stocks are advancing today than declining and volume is also tilted to the "plus side" with more volume in Advancing vs. declining issues within the NYSE. Markets have shown mild consolidation ahead of Thursday's important inflation print, but insufficient evidence of weakness in Equity indices warrants a bullish stance into tomorrow's inflation data. While investors have bid up equities to overbought levels per daily Relative Strength index (RSI) readings, this has been a notoriously poor reason to sell equities, and forward returns when RSI has been over 70% have proven nearly as robust as other times when RSI was under 70%. As i've discussed in notes in recent months and years, utilizing RSI for divergences along. with times when it enters overbought levels on weekly and/or monthly timeframes and then retreats can be a more effective way of using this indicator. The data below goes back since 1950 and shows times when RSI has been over 70% and the subsequent forward returns over a 3 month, 6 month and 12 month timeframe. (Per Bloomberg data)