Maybe a Cure For The Health Care Blues

The health care sector, the second-largest sector weight in the S&P 500, is the biggest laggard in the U.S. this year. Investors' views on the once-beloved group have been tested this week amid a busy week of earnings reports for the broader health care group, including a slew of reports from biotechnology and pharmaceuticals companies.

What Happened

The Health Care Select Sector Index (IXVTR), a widely followed gauge of domestic large-cap health care stocks, has been disappointing for most of this year. But heading into this week's earnings reports, the index is showing some signs of life.

Last week, the Health Care Select Sector Index gained 3.60 percent, erasing a modest year-to-date loss and bring its 2019 gain to 2.89 percent. That could tempt traders to consider the Direxion Daily Healthcare Bull 3X Shares CURE this week. CURE, the king among leveraged healthcare ETFs, tries to deliver triple the daily returns of the Health Care Select Sector Index.

Why It's Important

Nearly 40 percent of the Health Care Select Index is reporting earnings this week, making this an active time for CURE. Only the real estate and utilities sectors see a larger percentage of their components deliver quarterly results this week.

CURE enjoyed last week's health care rebound, posting a weekly gain of 11.13 percent and some data points suggest traders are renewing their interest in the leveraged health care fund.

For the five days ending Friday, April 26^th, volume in CURE was more than 60 percent above the trailing 20-day average, according to issuer data. During that period, just two of Direxion's leveraged ETFs saw larger increases in volume.

What's Next

Obviously, this week will go a long way in terms of testing investors' affinity for health care stocks and ETFs. Importantly, the aforementioned volume spike in CURE was accompanied by inflows.

For the 10 days ending April 26, CURE took in $28 million in new assets, or almost 17 percent of its total assets under management, according to Direxion data. Just four of the issuer's leveraged funds saw larger inflows than CURE over those 10 days.

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