Healthcare Stocks vs. Political Polls – A Correlation?

This week saw Healthcare stocks do a 180 degree turn in the way they feel and the way they are trading.  The stocks which were on a tear are not trading like a normal corrective reaction; the bid in the group feels like it is gone.

The turn came the day after the first Presidential debate which was October 03, 2012.

The BBH, PPH and the XLV all peaked on October 4th & 5th.  Since then, the bids have vanished.

The group as a whole made new 52 week highs after the Supreme Court’s ruling upholding Obamacare.

Even though the group is in a primary uptrend, and supported by fantastic demographics, we know that the market hates uncertainty and many of the group’s underlying technicals are negatively divergent.

We sold our Bristol-Myers (BMY) long and we are holding our Amgen (AMGN) short for now.

The charts below illustrate the correlation we see.

2012-General-Election-Romney-vs-Obama Polls tighten after 1st Presidential debate

XLV – Healthcare ETF Daily

PPH – Pharma ETF Daily

BBH – Biotech ETF Daily

Disclaimer: This communication should not be construed as an offer to sell or the solicitation of an offer to buy any security. (Click here for full disclaimer)



2 thoughts on “Healthcare Stocks vs. Political Polls – A Correlation?

  1. bikinianalytics Post author

    I just responded by email to a good friend who may have interpreted our commentary as suggesting Obama is bad for healthcare stocks. We assume no such thing. To clarify here are the points I sent to him.

    The implication is NOT that Obama is bad for healthcare stocks.

    In fact, healthcare stocks were strong before, and settled in and got stronger after SCOTUS decision on Obamacare.

    The implication is the Romney surge post debate unsettled the market because Romney has suggested he will repeal Obamacare, i.e Romney represents uncertainty.

    If anything, one would argue the tape says Romney may be bad for healthcare stocks.

    We are arguing neither.

    Obama was hurt by his debate and the day after the debate the healthcare stocks started selling off.

    The suggestion is the tape does not like uncertainty and the market had settled in with a presumptive Obama second term & Obamacare.

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