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Of the 10 sectors in the S&P, few others could see the landscape change as dramatically and quickly as this one.
We’re talking healthcare [XLV
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]. As you know, President Obama is making a hard push to reshape the industry.
On Wednesday, at an emotional forum in Virginia, the President hugged a cancer patient and vowed to bring greater efficiency and accessibility to the nation's health care system.
Although healthcare reform has been presented in the past, it seems more likely to be implemented now – in large part because the issue is deeply personal for the President who watched his mother struggle with insurance companies as she battled and ultimately lost the fight with cancer.
In fact, reports suggest progress is already being made. Senate Finance Committee Chairman Max Baucus (D-MT) was upbeat last week after announcing that panel members had found ways to bring the price tag to about $1 trillion over 10 years, down from an earlier estimate of a staggering $1.6 trillion.
Of course at the heart of the plan is the President’s promise to insure almost every American by making coverage available via a government run plan. In fact, at that forum in Virginia we mentioned above, once again he called for a government-run "public option" to compete with private insurers insisting that change "will come this year."
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And many politicians support the idea.
A group of House Democrats put out a statement last week saying they would oppose any healthcare overhaul that did not include a "strong" new government-run insurance program to compete with private insurers. Proponents argue it is the only way to ensure affordable coverage.
However opponents, such as Charles Grassley (R-IA) and other Republicans oppose this "public option," saying it would drive private insurers out of business and lead to a government-run health system.
Considering all the uncertainty how should you trade the sector?
Because lower healthcare costs are one of the main drivers of the change, I see a shift toward generic drugs, says Jefferies analyst David Windley. Teva [TEVA
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] is a big player in that space. Also look at drug development outsourcing with companies such as Icon [ICLR
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] and Paraexel [PRXL
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] .
Also, Cephelon [CEPH
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] may be another stock to watch. David Windley recommends getting in at current levels.
And earlier in the show, the traders also recommended keeping an eye on Elan [ELN
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] as a possible takeover target.
- Take Your Position: Retail Earnings
- The Return of Dividend Investing?
- Should You Believe in this Rally?
- Trading in this Technicals-Driven Market
- HALFTIME REPORT: How to Trade Senator Dodd's Financial Reforms
- Your First Move For Tuesday November 9th
- Web Extra: The Dow's Only Loser
- Pops & Drops: Altria, Potash...
- Tech: The Trade of the Year?
- A Revitalized Credit Card Industry?
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Trader disclosure: On July 1st, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AA), (AAPL), (BAC), (BX), (F), (NUE), (EEM); Seymour's Firm Owns (FCX), (YHOO); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU; Terranova Owns (XBI), (ABT), (MSFT), (UUP), (RIMM; Najarian Owns (F) Call Spread; Najarian Owns (GS) Call Spread; Najarian Owns (INTC) Call Spread; Najarian Owns (JPM) & Short (JPM) Calls; Najarian Owns (PALM) call Spread; Najarian Owns (YHOO) Call Spread; Najarian Owns (ELN) Calls
For David Windley
Jeffries makes a market in (TEVA)
Jeffries makes a market in (CEPH)
Jeffries makes a market in (ICLR)
Jeffries makes a market in (PRLX)
Windley Owns (FRX)
Data is a real-time snapshot *Data is delayed at least 15 minutes