trades
THE TECHNICIAN
A V E T E RA N T RA D E R TAC K LES T EC HNICALS
Medical Drama By Tim Knight
ne sector of the U.S. equity market that’s well populated by heavily traded and dynamic securities is healthcare. However, the fact that these financial instruments reside in the same sector doesn’t make them identical. Stocks, like people, are characterized by different personalities, and stocks in the medical field are no different. In spite of the wide range of “personalities” among different medical corporations, investors can group company tickers into subsets based on behavior. Let’s assign these groups metaphorically to three familiar hospital locations: the emergency room, the waiting room and the surgical theatre. To be clear, these whimsical group names have nothing to do with goods or services the corporations provide. Instead, they are shorthand ways of expressing the general personality of these ticker groups. All of these stocks were identified as related to medicine by the Sectors function of the SlopeCharts website. The lists were filtered based on price and volume to ensure that no thinly traded issues would make the cut.
O
Never a dull moment This stock has gone from triple digits to single digits and back again.
EHC UHS MD The emergency room Stocks in the emergency room group are characterized by high drama—their wild and dynamic swings. They are the kinds of securities that occasionally have periods of extremely high volatility. Three tickers in this group: THC: Tenet Healthcare operates acute-care hospitals that include ambulatory surgery centers, diagnostic imaging centers and urgent care centers across the United States. AMED: Amedisys provides home health services to the chronic, co-morbid, aging American population through its home health, hospice and personal care. EHC: Encompass Health Corp. provides postacute healthcare services through inpatient rehabilitation hospitals, home health and hospice agencies. The featured chart from this group is EHC,
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luckbox | august 2019
and a quick glance shows how powerful the up and down moves have been. The stock has gone from triple digits to single digits and back again, and very few periods in this multi-decade chart could be described as dull. See “Never a dull moment,” above. The waiting room In clear contrast to the “emergency room” stocks, those in the “waiting room” are slow, steady and generally “buy and hold forever” kinds of issues. Options traders would certainly want to consider a different kind of strategy with this class of stocks, because volatility tends to be low and the direction tends to be plodding steadily higher. UHS: Universal Health Services owns and operates acute care hospitals, behavior health centers, surgical hospitals, ambulatory surgery centers and radiation oncology centers. DGX: Quest Diagnostics provides diagnos-
Stocks, like people, are characterized by different personalities, and stocks in the medical field are no different
