The health-care sector just closed out a third straight month in the red, its longest losing streak in three years.
A fourth monthly decline would be its worst stretch since 2011, and one trader says there could be more pain ahead.
"I view the whole sector as a wounded target right now," said Boris Schlossberg of BK Asset Management on CNBC's "Trading Nation" on Monday. "Health care, in my opinion, is the most bloated, the most bureaucratic, the most inefficient sector of the economy. At 20% of the GDP and at $20,000 premium per capita at this point, they pretty much have squeezed all the rentier profits out of the system that they can at this point."
The sector also has a target on its back as the 2020 presidential election draws closer. The XLV health care ETF has fallen more than 3% in the past three months as Democratic presidential candidates such as Elizabeth Warren have pushed for a "Medicare For All" solution.
"Even if the Democrats do not win, there's going to be tremendous amount of pressure to cut costs, control drug prices," said Schlossberg. "Any way you slice it, basically the sector is a 'sell the rally' trade at this point. Any time you have a pop in the sector, it's going to be a sell for quite a long time."
Health-care stocks faced similar pressure in 2015 and 2016 as Democratic presidential candidate Hillary Clinton pledged health-care reform. At its worst, the XLV ETF plummeted 11% in the third quarter of 2015.
However, Miller Tabak equity strategist Matt Maley does not see that degree of decline this time around.
"I don't think it'll be anywhere near as bad as it was four years ago because the setup is much, much different. In the 12 months leading into the summer before the election year the last time around, the XLV had outperformed the S&P by two times," said Maley on "Trading Nation" on Monday. "This group had become very overbought, and very over-owned."
This time around, Maley says the XLV ETF had performed in line with the S&P 500 before beginning its breakdown in April.
"I don't think you'll have that forced selling or at least that reweighting that you had going forward. So even though I think it's a problem, it's not as big a problem," said Maley.