Donald Johnson

Is There a Legitimate Case for the Healthcare Providers ETF?

Although I wrote months ago that health executives weren't very concerned about the elections, I think they have to be now.

Many health stocks are depressed and they will be until the uncertainty about Obama's proposed nationalizing of the health insurance markets is resolved. We don't know exactly what he'll try to get through Congress. And we don't know whether the GOP will be able to kill or modify Obama's plans. Clinton had basically the same majorities in the House and Senate that Obama will have, and he couldn't get Hillary care enacted.

The public mood, of course, is much different today. Insurers shoot themselves in the foot every day, and consumers and politicians are sick of them. They are much harder to defend today than they were in '93 and '94. So I think enough GOP senators will support Obama to get something done.

But the markets aren't sure, yet. Uncertainty is a market killer.

In addition, with higher co-pays and deductibles, the health insurance and health care markets are acting much more like normal markets despite all of the governmental distortions.

This is hurting demand for insurance, medical devices and medical services. This is shown in the depressed prices of hospital company stocks.

So, if you're going to play the health ETFs, play the technicals as much as the fundamentals, which are very cloudy at this point, imo.