The Healthcare Sector SPDR ETF (XLV) skyrocketed by 2.3%, reaching new 52-week highs and signaling an overbought condition with its RSI at 78. This upward trend has been in place since November, with only one decline since October, as the 200-day moving average starts to rise. Brazil’s iShares MSCI ETF (EWZ) also jumped 2.3%, hitting a 52-week high with an RSI of 78. This rally began in August, coinciding with a rise in the 200-day moving average, while the ETF tested the $29.00 level before continuing to climb.

European Markets Overview

European markets, reflected by the Vanguard FTSE European ETF (VGK), reached new 52-week highs around $82.00. However, despite the upward momentum, a bearish divergence in RSI indicates weakened buying power, suggesting potential short-term profit-taking. The S&P Biotech ETF (XBI) also hit 52-week highs after breaking out in mid-August and crossing the $100 mark with strong momentum. However, the RSI of 67 shows a bearish divergence, indicating that profit-taking might happen soon before aiming for a resistance level of $115. The semiconductor sector, through the SMH ETF, remains strong, despite a recent 2.2% dip, ending near $352.00. Following a peak of $373.00 on October 29th, a rebound is expected, and the ETF could move toward a $370.00 target by early December. The Healthcare sector (XLV) is showing strong performance, but the high RSI indicates a pause may be near before further gains. This optimism follows a robust Q3 2025 earnings season for pharmaceuticals, where many leading companies exceeded estimates and raised their full-year forecasts. For derivative traders, selling December put spreads with a short strike near $145 could be a smart way to collect premium while waiting for a better entry as short-term weaknesses arise.

Breakout Trends and Trading Opportunities

The surge in Brazilian equities (EWZ) is notable, but its high RSI suggests caution against jumping in at current prices. This rally has been fueled by a recent boost in iron ore futures, which have risen over 8% in the past month after China’s October 2025 industrial output surpassed expectations. We recommend selling out-of-the-money put options with a strike near the $31 support level for the December expiration, offering a planned way to gain bullish exposure during a pullback. While Europe (VGK) is setting new highs, we remain cautious due to the bearish divergence in momentum, where price rises outpaces buying confidence. Recent data shows Eurozone core inflation cooled to 2.5% in October 2025, raising speculation about potential rate cuts from the ECB in December. Given these mixed signals, a patient strategy of selling put spreads below the $80 psychological level seems wise to take advantage of heightened implied volatility. The biotech sector (XBI) has shown remarkable strength, but it’s signaling a potential short-term pullback due to a bearish divergence. Last week’s news of a significant acquisition in gene editing added strength to the sector and highlighted its underlying value. We see an opportunity to buy December call spreads, like the $110/$115 spread, if XBI pulls back to the expected $108.50 support level. Semiconductors (SMH) stand out as market leaders, and the recent dip from the October 29th high looks more like healthy consolidation than a reversal in trend. This view is supported by the latest Semiconductor Industry Association report, revealing that global sales in September 2025 grew 15% year-over-year, largely due to demand for AI infrastructure. We recommend using any weakness toward the $350 level to start bullish positions with December call options targeting a return to the $370 resistance. Create your live VT Markets account and start trading now.

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