With increased spending thanks to the Affordable Care Act (ACA, or Obamacare), rapid innovation thanks to biotech, and almost unbeatable momentum, XLV was a huge equity market leader for most of this bull market.  Since 2014, Energy, which had kept up pretty well, melted down.  Below, we chart the ratio of XLV (the S&P 500 Health Care sector ETF) and XLE (the S&P 500 Energy sector ETF).  When the top chart is rising, Health Care is outperforming, and vice-versa.  As shown, after years of steadily higher returns from Health Care, the sector is in deep trouble versus Energy over the last few sessions.  Biotech is definitely a factor; the IBB ETF, which tracks biotech names listed on the Nasdaq, was down over 5% as of this writing. But more broadly, Health Care is just the latest market leader to get hit; one of the reasons the chart below is so painful is the big gains in Energy, which has been a very popular short.

We’ll be covering this trade unwind more in this evening’s Closer report, which Bespoke Institutional members receive in their inbox every evening.

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