economy
February 19, 2026
Charts suggest this sector could be the next to lead the market higher
As the market has hit new milestones, the breadth has been strong, but the leadership is wrong, Jay Woods says.
TL;DR
- Market rallies to S&P 7,000 and Dow 50,000 have been short-lived, with leadership concerns despite strong market breadth.
- Historical data indicates that energy, materials, and staples sectors lead near market tops.
- The second year of a presidential cycle (midterm year) tends to be challenging for markets, mirroring characteristics of 2018.
- Sectors like health care, utilities, and real estate are showing renewed strength, similar to leading sectors in 2018.
- Utilities rallied over 8% recently, and real estate is recovering towards its all-time high.
- Health care is identified as the next sector likely to lead, with key components like Merck, Johnson & Johnson, and Amgen trading near 52-week highs.
- Technical analysis suggests a potential breakout for the health care sector, with specific price levels ($160 for confirmation, $155 for pullbacks) noted for potential trades.
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