Market-Leading Performance in 2024

After experiencing a modest loss in 2023, the healthcare sector’s stocks are enjoying a strong start in the new year, outperforming the broad market. In fact, the Health Care Select Sector ETF XLV has climbed 2.2% so far in January, eclipsing the 0.6% decline in the broad market (SPY).

Outperforming Other Sectors

What’s even more impressive is that healthcare stocks are outperforming all other sectors by wide margins, making them a standout performer in the market. This is in stark contrast to the worst performer, energy stocks, which have seen a decline of 4.5% year-to-date.

Positive Technical Indicators

According to Jeff DeGraaf of Renaissance Macro, the technical profile for several health stocks looks attractive, particularly with the return of the golden cross – the 50-day moving average rising above its 200-day counterpart. DeGraaf advises that “several healthcare names are exhibiting golden crosses, and we continue to believe the prospects for the sector are attractive for 2024.” This bodes well for XLV, which has also seen its 50-day average rise above its 200-day average.

Potential for an Enduring Bull Run

For healthcare investors, the breakout of XLV from its trading range on the upside this month – after several failed attempts in recent years – signals the potential for an enduring bull run in 2024. This is further supported by the fact that XLV has finally broken out of its trading range, potentially signaling a favorable trend for healthcare shares in 2024.

Overall, there is a growing sense that the odds are leaning toward a favorable trend signal for healthcare shares in 2024, with the early performance indicating a promising year ahead.