Beginners Series Webinar: Join us on Monday, November 17th at 2 PM (ET) for our NDW Beginners Series Webinar. The week's topic is: How to Utilize Participation Indicators Register Here

In an investment environment dominated by large-cap technology firms and hyperscalers, it is easy for smaller, traditionally defensive sectors to receive less attention. After underperforming through the first three quarters of 2025, the healthcare sector has staged an impressive rebound in Q4. Since the end of September, the Health Care Select Sector SPDR Fund (XLV) has gained 9.75% as of Thursday. Even more notably, XLV is outperforming the second-best sector by over 8% and the S&P 500 Index (SPX) by nearly 9%, as shown in the chart below.

This strong performance can be attributed to several factors: investor rotation into a long-lagging sector, a shift in sentiment from “risk-on” toward more defensive positioning, and increased corporate and M&A activity. If these dynamics persist, healthcare could maintain its momentum. This past week brought two significant developments: (1) The Health Care group on the Asset Class Group Scores page crossed above 4.0 for the first time since February 2021; (2) XLV itself surpassed a fund score of 4.0 for the first time since October 2024.

For the first milestone, we analyzed every instance since 2003 where the healthcare group exceeded 4.0 (excluding short-term clusters) and calculated XLV’s forward returns across multiple intervals. To reduce skew, we also included averages excluding 2008 crisis data. The results show above-average returns for 1-week, 1-month, 3-month, and 6-month horizons, while 1-year returns trend closer to historical norms.

For the second milestone, we applied the same methodology to XLV crossing above 4.0. Again, short-term forward returns were notably strong, with performance moderating toward average levels over a one-year horizon. These findings suggest that while near-term momentum is favorable, longer-term returns may normalize as the sector stabilizes.

Bottom line: Healthcare’s recent strength, coupled with improving technical signals, highlights a growing opportunity for investors. For active managers, this sector merits close attention—not only for its current momentum but also for its defensive qualities in an uncertain market environment. As you identify potential entry points, remain mindful of possible overbought conditions, as indicated by the “Weekly OBOS” signal. Consistent monitoring will be key; doing so can help uncover attractive opportunities as the trend evolves, allowing you to capture more of the sector’s upside while managing risk effectively.

Apart from the Dow Jones Industrial Average (.DJIA), international funds have outperformed most U.S. equity indices this week; marking a continued run of positive performance by international equities that has kept pace with and, at times, outperformed U.S. indices in recent months. While U.S. equities remain strong from a technical perspective, portions of the international equity space have shown enough improvement recently to move ahead of the core S&P 500 Index Funds group on the Asset Class Group Scores page.

This has caused the U.S. Equity Core Percentile Rank on the ACGS page to fall to its lowest level since June below 93%. Though still an indication of the core market’s strength relative to other assets on the AGCS page, the Core Percentile Rank reading has been steadily declining since reaching the 99^th percentile in early August with international equity groups predominantly scoring and ranking ahead. In fact, as of Thursday’s close (11/13), 14 out of the top 25 groups on the Asset Class Group Scores page are international related groups with the remainder mostly being U.S. equity groups.

While the Asset Class Group Scores page highlights certain notable countries like Japan and China, most of the international groups focus on regional exposure. Given that, the table below helps breakdown strength relative to the market of individual country ETFs. Along with the ETF’s current RS chart signal and column position, the dates in which the signals and column changes occurred are displayed in addition to the ETF’s current fund score. Ultimately, this allows a view of where strength already exists as well as if there is improvement in store for other countries.

Before diving further, we wanted to review the various signal and column combinations for relative strength (RS) charts. The strongest signal and column combination for a RS chart is a buy signal and in a column of Xs, which shows a near and long-term trend of outperformance has been established. Conversely, the weakest RS chart signal combination is a sell and in a column of Os, showing near and long-term underperformance is prevalent. RS charts that are on a RS buy signal and in a column of Os highlight securities that have outperformed in the long-term, while underperforming in the near-term. These tend to be areas to monitor for further potential technical weakness. Lastly, an RS chart that maintains a sell signal and in a column of Xs indicates long-term underperformance but improvement in the near-term, making these areas to watch for potential improvement.

After reviewing the RS chart combinations, it is easy to see what countries have maintained positive and negative market relative strength. Out of the 40+ ETFs displayed, just shy of 60% maintain near and long-term trends of outperformance relative to the market as defined by the S&P 500 Equal Weight Index (SPXEWI). As it stands, European and Asian countries maintain the highest level of relative strength with Ireland (EIRL) maintaining the long-term running RS buy signal among those charts still in Xs. The longest running RS buy signal of any country resides with India (EPI), but underperformance in the latter part of 2025 has brought the chart in Os. Given EPI’s RS chart position, it along with the iShares MSCI UAE ETF (UAE) are countries to monitor for further potential weakness.

On the other side of the coin, countries within the sell and in Xs bucket are ones to watch for improvement. As of Thursday’s (11/13) close, the Netherlands (EWN) is the closest country to seeing its RS chart return to a buy signal. Others like Malaysia (EWM) have also moved back into a column of Xs as of late, broadening the potential for additional countries to show long-term relative strength. As noted above, the countries that maintain sell signals and a column of Os on their RS charts are ones to definitely be avoided. One country that many international RS strategies have avoided is exposure to Australia, which has long been a laggard compared to others around Oceania and the Asia-Pacific region.

While not every investor may look to run a single country portfolio due to the associated risk, many are likely to hold broader international ETFs and/or mutual funds. Knowing what countries are exhibiting positive relative strength against U.S. equities can provide an advantage in selecting international portfolios. For example, while regional strength has been with broader Europe, the table helps identify those countries that show leadership along with those that have been laggards. By knowing where strength resides along with where it doesn’t, investors can better position portfolios to capture long-term investment trends.

Featured Charts:

Portfolio View - Major Market ETFs

Daily Option Ideas for November 14, 2025