The iShares U.S. Medical Devices ETF (IHI) could be setting up for a turnaround — and a few stock charts detailed here will show why. First, the bad news: IHI has been in a downtrend since the very start of 2026, visibly underperforming the major indices by a wide margin. Along the way, we've seen several rally attempts strong enough to generate moving average convergence/divergence, or MACD, buy signals three separate times since the middle of February. As is clear, the prior two signals in February and April both failed at key downtrend lines. The most recent buy signal initially appeared to suffer the same fate in mid-May, but the ensuing pullback produced a marginal higher low and buyers returned as June began. Currently, IHI is trying to leverage that latest MACD buy signal better, as it once again tests the downtrend line connecting the January and early March highs. The question is whether this time is any different. The answer is that yes, it could be. IHI's current bounce has helped build a potential double-bottom formation, with the 51 resistance-level lining up closely with the 50-day moving average, which IHI is now testing for the first time since early 2026. The 14-day relative strength index has also just poked above the 50 level for the first time since late February. Again, we've seen promising rallies before, only to watch them turn into head fakes. Because of that, investors are perhaps doubting this attempt as well. But as just described, this setup has some compelling short-term technicals in its favor this time that it was lacking before. Zooming all the way out to the monthly log chart, it's clear that IHI has also fallen back to a major support zone in the mid-40s. This is the same area where the ETF pulled back to and bounced from on three prior occasions — twice in 2022 and again in 2023. That last test, of course, ultimately led to a multi-year advance that carried IHI back toward its all-time highs. The most recent six-month decline now has taken the ETF from that same high point right back down to this well-established support area. From this perspective, the pendulum has fully swung from being near resistance and overbought to being near support and oversold. Clearly, buying weakness within this long-term range has been a rewarding strategy over the years. As a result, when combined with the potential bottoming process, we can see why the current rally attempt appears more constructive than the prior failed bounces that occurred during the downtrend. Lastly, it's also clear how severe IHI's weakness has been relative to the State Street Health Care Select Sector SPDR ETF (XLV) . The XLV underperformed through the first half of 2025 before going on to post its strongest four-month advance on record from August to November of that year. As a result, the IHI/XLV relative strength line has declined in nearly a straight line ever since. Over the last several months, that relative weakness has pushed the 14-month RSI on the ratio down to its most oversold reading in history. Meanwhile, the IHI/XLV relative line has fallen back to the breakout zone from 2016, which also coincides with the peak reached between 2010 and 2011. The bottom line is that a number of constructive technical developments are beginning to emerge at the same time, both on a short-term and long-term basis, as well as on an absolute and relative perspective. That doesn't guarantee an immediate reversal, but it does suggest the risk/reward profile is becoming more favorable than it has been in quite some time. —Frank Cappelleri Founder: https://cappthesis.com DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
<small>Source: CNBC</small>
