Remember when everyone said healthcare was the boring, defensive corner of the market you only bought when you were scared of everything else?
Yeah, me too.
Turns out 2025 had other plans.
Last Friday something happened that made me do a legitimate double-take at my screens. The entire Health Care Select Sector SPDR ETF (XLV) – all 61 components – closed the day in the green. Every single one. That hasn’t occurred since December 1998. We’re talking once-in-a-generation territory here.
And history is extremely clear about what tends to happen next.
A Once-in-27-Year Event Just Triggered
Let’s put this rarity into perspective. Since the XLV launched in late 1998, there have only been 35 trading days where 100% of the components advanced. Thirty-five. Five. That’s roughly once every nine months on average, but they tend to cluster around major turning points.
The forward returns after these “full participation” days are frankly ridiculous:
- 3 months later: +4.5% average (vs +2.1% on normal days)
- 6 months later: +8.1% average (vs +4.1%)
- 12 months later: +13.2% average (vs +8.8%)
Even better – the hit rate (percentage of times the sector was higher) jumps by 15-19% depending on the time frame. In plain English: when the whole sector marches higher together, it’s usually the starting gun for a sustained move.
I’ve been pounding the table on healthcare names all year – pieces on Alnylam, Gilead, Amgen, AbbVie – because the price action was screaming “something’s changing” long before the crowd noticed. Now the crowd has definitely noticed.
The Quiet Rotation Just Got Loud
For most of 2023 and 2024, healthcare lagged badly. The mega-cap tech trade sucked up all the oxygen. Defensive sectors were dead money. But underneath the surface, a handful of names started basing, then creeping higher, then accelerating. I called it a stealth rotation because institutions were accumulating without fanfare.
Stealth phase is officially over.
Last week, while the Magnificent Seven were getting mauled and Bitcoin flirted with $80k, healthcare quietly put in one of its strongest breadth thrusts in decades. Twenty-one percent of XLV components hit 52-week highs on Friday alone – the most since summer 2024.
This isn’t just a dead-cat bounce in a few big pharma names. This is broad, powerful participation.
Life Sciences Tools & Services – The Sub-Sector on Fire
If you want to see where the real torque is right now, zoom into the Life Sciences Tools & Services industry group. These are the “picks and shovels” companies that supply the labs, pharma manufacturers, and biotech firms with precision instruments, analytics, and testing equipment.
Three names in particular have my full attention: Mettler-Toledo (MTD), Thermo Fisher (TMO), and Agilent (A). All three are on my Best Stocks list and all three are flirting with monster breakouts.
Mettler-Toledo International (MTD) – The Breakout King
Mettler is the 800-pound gorilla in precision weighing and analytical instruments. Over half its revenue comes from laboratory instruments sold into pharma, biotech, and academic research – exactly the customers who are ramping spending again.
The stock spent most of the last five years in a brutal downtrend. Weekly chart looked ugly. But something beautiful happened last week: price finally snapped that multi-year trend line with authority.
Relative strength is screaming, RSI confirming momentum, volume picking up. Citi just raised their target to $1,700 (almost 20% upside) citing recurring revenue growth and repeated earnings beats.
I’m giving this one room to run. Support sits around $1,300. As long as it holds there on pullbacks, I stay long.
Thermo Fisher Scientific (TMO) – The Giant Waking Up
At $220 billion market cap, Thermo is the undisputed heavyweight. If you’ve ever run a PCR test, sequenced DNA, or stored biological samples, chances are Thermo equipment was involved.
The chart printed a golden cross (50-day moving average crossing above the 200-day) back in September – usually a bullish harbinger. Price has consolidated nicely since then and is now pressing against the yearly high.
It hasn’t punched through yet, but it feels inevitable. When (not if) it clears that level, the measured move target is north of $650 pretty quickly. I’m watching this one like a hawk.
Agilent Technologies (A) – The Cleanest Setup
Spun out of Hewlett-Packard back in 1999, Agilent has quietly compounded at excellent rates for patient shareholders. The stock is already kissing its 52-week high at ~$153, and overhead supply is extremely light all the way back to the 2021 peak around $180.
Technically, this is textbook accumulation. Rising 50-day moving average, higher lows, tightening range. One strong volume day and we’re off to the races.
Traders: respect the 50-day on any pullback. A decisive break below would invalidate the setup and I’d step aside.
Why This Move Feels Sustainable
Skeptics will say “healthcare always rallies when growth stocks roll over – it’s just rotation.” Sure, there’s some truth to that. Money has to go somewhere when the hot trade cools.
But several tailwinds suggest this isn’t your garden-variety defensive rotation:
- Biotech funding winter appears to be thawing – IPOs and follow-ons picking up
- Pharma pipelines are the healthiest they’ve been in years (obesity drugs, oncology, gene editing)
- Recurring revenue models in tools & diagnostics are sticky and growing
- Valuations remain reasonable compared to tech (forward P/E ~19x vs 30x+ for the Nasdaq)
- Demographics aren’t going away – aging population = structural demand
Put simply, the fundamentals are finally catching up to the price action we’ve been seeing in individual names all year.
Risk Management – Because Nothing Goes Straight Up
Look, I’m excited. But excitement without discipline is how accounts blow up.
Here’s how I’m handling risk on these ideas:
- Position size: no single healthcare name more than 4-5% of portfolio
- Stop discipline: defined levels (MTD $1,300, TMO 50-day MA, Agilent 50-day MA)
- Cash buffer: still keeping dry powder for deeper pullbacks
- Hedging: light put protection on the XLV if we get extended
The beauty of this setup is we don’t need to be heroes. The sector is doing the heavy lifting. We just need to not to screw it up.
The Bottom Line
Healthcare just flashed one of the rarest and most bullish breadth signals in its modern history. The Life Sciences Tools group is leading the charge with pristine technical setups across multiple names.
Whether this turns into a three-month trade or a multi-year leadership cycle remains to be seen. But the risk/reward right now looks heavily skewed to the upside.
I’ve been waiting for this moment all year. Feels good to finally take the newsboy cap off and just enjoy the ride.
Disclosure: The author and clients of his advisory firm may own positions in the securities discussed. This is not personalized investment advice. Do your own research and consult professionals before making decisions.
