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Health care stocks are about to do something they have never done before

Talking Numbers

Grabbing all the headlines these days have been momentum and growth stocks. Even the once-quiet and boring utilities are getting some of the glory as the best performing sector year-to-date.

But there's another sector that's bringing in not-so-shabby returns in 2014 and beating every other part of the market in the last 12 months: healthcare.

Over the past year, the S&P 500's health-care sector is up 19 percent, and it's up nearly 2 percent in the past 30 days alone.

Richard Ross, global technical strategist at Auerbach Grayson, says health-care stocks, which have traditionally been seen as defensive, are have been on the offense the past few years. But, he thinks that's about to change given the technicals on the SPDR S&P Health Care ETF (XLV), which tracks the sector.

"I think that trend is nearing an end and you want to be a seller of healthcare up here," said Ross, a "Talking Numbers" contributor.

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The XLV has settled into a bearish triangle over the past few weeks as its volatility contracts. Ross thinks the ETF will break to the downside of that triangle. A look at a longer-term chart of the XLV shows its vulnerability since it is getting close to testing its 200-day moving average for the first time in 2 ½ years, Ross says.

(Watch: Don't mess with 'triangle of death,' Dr Oz warns)

The XLV's recent strength is helped tremendously by the success of one stock, Johnson & Johnson, which is 12.8 percent of the ETF's holdings. Johnson & Johnson is up 9.4 percent year-to-date.

"That's really like the Apple of healthcare," Ross said. "It's one of the best performing stocks in the Dow. So, that's what's driving the ship here. I think this whole ETF is vulnerable. You want to be a seller of healthcare."

According to Gina Sanchez, founder of Chantico Global, the fundamentals are showing a vulnerability as well. The market may now be getting used to the Affordable Care Act (called "Obamacare" by critics) but, that means a change in who will foot the bill for healthcare.

"We are seeing a shift in health-care costs from companies to consumers," Sanchez said. "Seeing that we have a weak consumer, that might not necessarily be a great thing for the health-care market."

On the other hand, the pace of research and development has picked up in the industry as has the pace in approved drugs entering the market, notes Sanchez.

(See: CNBC's Health Care coverage)

"If you look at individual names in the health-care market, there are certainly opportunities there," Sanchez said. "We might see some bottoming in the biotech industry. We're finally seeing R&D pick up and some new drug approvals coming on to the market. That would be positive."

For investors, the ability to identify companies that can adapt to lower cost structures and higher volumes while still retaining pricing power will be key, Sanchez told Talking Numbers.

"But, I do think that this monumental shift in who's going to bear those health-care costs is important," Sanchez added. "That might change the nature of how we look at this particular industry over the long term."

To see the full discussion on healthcare, with Ross on the technicals and Sanchez on the fundamentals, watch the above video.

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