The outlook for the U.S. healthcare sector has improved significantly during the past month.
The sector’s poor performance relative to the S&P 500 Index since January came to an end in mid-April.
Prior to that point, investors were responding, in part, to comments made by several Democrat presidential candidates that advocated a “single pay” universal healthcare system to replace the current private healthcare system.
After mid-April, focus by investors changed to anticipation of a series of recurring good news events.
The industry holds a series of annual conferences from late spring to early fall that introduces new and improved healthcare services and products.
The most prominent conference is the annual American Society of Clinical Oncologists (ASCO) conference, which will be held this year in Chicago from May 31 to June 4. New drugs and treatments for cancer are expected to be announced. Major pharmaceutical and biotech companies are scheduled to release their latest research results.
The U.S. healthcare sector has a history of moving higher on a real and relative basis from April 25 to the end of September. History has started to repeat this year.
On the charts, the healthcare sector and its related Exchange Traded Funds reached an intermediate low in mid-April when they started to outperform the S&P 500 Index. This week, they moved above their 20-day moving average.
Canadian investors can invest in the sector for a seasonal trade in several ways.
Investors with U.S. cash can own Health Care SPDRs (XLV-N).
Harvest offers a novel option, Healthcare Leaders Income ETF (HHL-T), that combines an equal weight, big cap healthcare portfolio of stocks used as a basis for covered call writing strategies.