Major Healthcare Stocks Booming at New 52-Week Highs (MRK, ESRX, ANTM, UNH, AET)

Chart of Major Healthcare Stocks at New 52-Week Highs (MRK, ESRX, ANTM, UNH, AET)

Some of the largest healthcare companies in the S&P 500 have been booming, and it just got even better for these high-flying stocks. The stocks below all saw new 52-week highs on Wednesday, capping off solid year-to-date performance for each of them.

The Top Performers

Merck (MRK)
Express Scripts (ESRX)
Anthem (ANTM)
UnitedHealth (UNH)
Aetna (AET)

The Fed

Helping push these stocks to new highs was, of course, the Fed. The entire market surged on what many saw as conciliatory remarks from Federal Reserve Chair Jerome Powell on Wednesday. Usually an unapologetic hawk, Powell issued some rather dovish monetary policy comments. In stating that interest rates are “just below neutral” for the economy, Powell essentially suggested that interest rate hikes could slow considerably going into 2019 and beyond.

The Fed has already raised rates three times this year, and is widely expected to hike again in December. But 2019 has been largely uncertain. With Powell’s new comments, the markets were assured that Fed rate hikes will probably not go overboard unchecked. This prompted markets and investors to breathe a collective sigh of relief, and the major indexes surged sharply as a result.

The Healthcare Sector

Back to the top performers hitting new 52-week highs. They’re dominated, as mentioned, by healthcare-related stocks. Only one – Merck – is a major pharmaceutical manufacturer. The other four are all health insurance and benefits companies. This is not surprising, as the healthcare sector has been outperforming most other sectors this year.

Does this mean it’s a good time to buy these stocks that have hit new highs? Well, there are (at least) three schools of thought on that:

1) Buy strong stocks in strong sectors when they breakout,

2) Wait for weakness within uptrending stocks before buying (AKA ‘buy the dip’), or

3) Short stocks when they hit new highs.

We are mostly proponents of the 2nd strategy, though the 1st is also a common option, especially for technical traders. What we would recommend strongly against, though, is shorting any of these strongly performing stocks in strong sectors just because they’ve hit new highs.


IMPORTANT: The information above should not be construed as investment advice and should not be considered as a solicitation to buy or sell securities. Past performance is not indicative of future results. Trading and investing in the financial markets involves substantial risk of loss, and may not be suitable for all investors.

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