A quick update this week. Sector picture, the healthcare ETF, why I'm ignoring Energy, and where McKesson sits right now. If you've been following along you'll know most of this — this isn't a reset, it's a check-in.
Sectors — still not getting distracted.
On my US sector screen, Healthcare is still leading on the week and the month. Technology is still trending down on every meaningful timeframe. That's the whole story really, but let me address the noise because there's been a bit of it this week.
Tech has had a green day. People are asking whether it's finding legs. Whether money is about to rotate back in. Whether the big AI earnings in a few weeks will reignite the whole thing. And honestly? It might. I'm not going to pretend I know what Nvidia is going to say in August.
But here's what I do know. Every time Tech has bounced over the past month, it's given it back within a few days. The week and month numbers are still negative on my screen while Healthcare's equivalent numbers are still positive. That's not a coincidence — that's the data telling me where the money actually is, not where people are speculating it might go.
Tech is still trending down and Healthcare is still trending up. Until that changes on the weekly and monthly data — not just a single green day — I'm not moving. That's the process. It's not exciting, but it's what works.
Q2 earnings are fast approaching and this is where it gets interesting. The market is going to be volatile for the next few weeks as people guess the outcome. Strong beats and Tech could lead a sharp recovery. Guidance cuts and we're looking at something much more serious. I've already written about the scenarios in detail — go back and read that post if you missed it. For now I'm positioned where the confirmed strength is and I'll let the earnings data tell me what to do next.
The Healthcare ETF — sector still supporting the watchlist.
I pulled the XLV chart this week — the State Street Healthcare SPDR ETF. It's a clean way to check whether the sector is actually supporting the individual names I'm watching before committing capital to any of them.
The daily chart shows a deep base formed between March and May, a clean breakout from late May, and an accelerating uptrend through June and into July. EMAs perfectly stacked — 9 above 20, 20 crossing above 50, all three sloping upward. RSI touched 70 at the recent high, pulled back slightly, and is now cooling into the 60-65 range. That's healthy. Volume has been consistent on the move up with no signs of distribution.
The sector ETF is healthy. The trend is intact. This confirms that going into individual names right now is supported by the sector structure — I'm not picking stocks in a broken sector.
Before I enter any name in this sector I run through four questions. Price above the 20 EMA? RSI in the 50-65 zone? How far from the 52-week high — is there room to run? And crucially — when are earnings, and does that create risk I need to manage? That last one matters a lot right now with reporting season weeks away.
Energy — not interested. Here's why.
Energy had a strong week on my screen and a few people asked me about it. I looked at it, identified the catalyst, and walked away in about thirty seconds.
The catalyst is the Iran conflict. Which, if you've been following the news, changes roughly every four hours depending on what Trump had for breakfast and whether someone in Tehran is in a good mood. One diplomatic phone call and the entire oil premium unwinds overnight. You can't chart your way out of that. It's less like trading and more like watching a circus — entertaining, occasionally alarming, and absolutely no place to put serious money.
Geopolitical catalysts are the worst kind for swing trading. They reverse without warning, stop placement becomes almost impossible, and you'd be buying after the move rather than before it. Energy goes back on the shelf until there's a structural fundamental reason driving it. A conflict that changes by the hour doesn't qualify.
McKesson — still at the top of my list.
I've covered McKesson in detail before so I'm not going to repeat the full deep dive here. Quick recap for anyone new: McKesson is one of three companies that controls most of the US pharmaceutical distribution market alongside Cencora and Cardinal Health. It's infrastructure-level healthcare — not glamorous, not exciting, just essential. More importantly, it's been aggressively expanding into oncology, which generates margins roughly double those of the core distribution business. That's the growth story in one sentence.
What I'm watching on the chart.
MCK is trading around $819, roughly 18% below its March 2026 high near $999. The selloff followed a revenue miss rather than any obvious deterioration in the longer-term business thesis, and the recovery since late May has been clean. A multi-week base formed between May and late June, price broke out of that base in early July, and the EMAs are beginning to stack bullishly. The $790 breakout level is now acting as support.
The entry right now isn't ideal. The breakout has already moved 3-4% off the base and RSI is heating up on the daily. I'm not chasing it here. Alert set at $800. If it pulls back there and holds on a closing basis, that's the entry. If it keeps running without me, it wasn't my trade.
Estimates and valuation
Fiscal 2026 free cash flow was $5.4 billion. Management is guiding to fiscal 2027 adjusted EPS of $43.80 to $44.60, implying 12-14% growth year on year, while reaffirming its longer-term adjusted EPS growth target of 13-16% annually. That's not a one-year number — that's the structural growth commitment.
Here's how I'm thinking about fair value using the midpoint of FY27 guidance at $44.20:
At my target entry around $800, I'm paying roughly 18x FY27 adjusted earnings. That's a premium to McKesson's longer-term historical average, so I'm not going to pretend the stock is obviously cheap. But the business mix has improved, management is targeting long-term adjusted EPS growth of 13-16%, and Wall Street remains strongly bullish on the stock. The analyst community is averaging a price target around $961, with 14 Buy ratings, three Hold ratings, and zero Sell ratings. From an $800 entry, that represents roughly 20% upside to the average analyst target. I'll take that potential risk/reward with a defined stop.
To be clear about what the thesis actually is: this isn't an undervalued stock. It's a quality business in a strong sector with an improving chart and reasonable upside. That distinction matters.
Growth story and investor sentiment
The oncology and multispecialty platform is the thing to watch — it's growing materially faster than the core distribution business and at significantly higher margins. Management confirmed at their last earnings call that oncology remains the primary growth driver alongside their biopharma services business. The buyback programme is also doing serious work — share count reduced by more than 60% over two decades, with a new $2.25 billion accelerated repurchase and a $5 billion increase to the buyback authorisation approved in April 2026.
Retail interest in MCK is low — it barely registers on investing forums. That's not a negative. It means there's no crowded retail trade to unwind, no hype overhang, and no meme-stock volatility to navigate. This is exactly the kind of quality compounder that can quietly sit outside the retail spotlight.
The thesis is intact. The sector is supporting it. The chart needs one more pullback to give me a controlled entry. I'm watching $800. Until then – as always – patience!
