Technician makes contrarian call on health care

The worst-performing sector in the last year is about to make a comeback, says one technician who made a contrarian call on health care.

The sector was down 4 percent at the end of last year after a volatile 2016. But Cornerstone Macro's Carter Worth says a bounce is in the charts, and a divergence between the top-performing sectors in the S&P 500 and the laggards is key.

On CNBC's "Options Action" Friday, Worth took the surging financials, and compared their 2016 progress with that of health-care stocks. At the end of last year, financials had outperformed health care by about 30 percent, but Worth believes that a convergence between the two is about to happen.


In other words, health care is about to play catch up in the coming year.

"This spread has only happened two other times since 1990, and usually it's quite right to bet for convergence," said Worth. "I think you want to be contrarian here and buy health care."

Health care was off to a strong start to the year, rising more than 1 percent Tuesday.

Latest Video

Tutorials

Host Bio

  • Melissa Lee

    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

Options Action Traders

From Our Sponsor

Sign Up for Our Newsletter Options Action

Insight directly from the members of our Options Action panel
Get this delivered to your inbox, and more info about about our products and services.
By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.