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Things Are About to Get Interesting For Healthcare Leveraged ETF

This article was originally published on ETFTrends.com.

This week, traders have been focusing on fourth-quarter earnings reports from the financial services sector. Next week, one of the sectors that will be in focus is healthcare, the second-largest sector weight in the S&P 500.

A spate of healthcare earnings reports next week could spur interest in the Direxion Daily Healthcare Bull 3X ETF (CURE). CURE seeks daily investment results equal to 300% of the daily performance of the Health Care Select Sector Index. The index CURE tracks includes domestic companies from the healthcare sector, which includes the following industries: pharmaceuticals; health care equipment and supplies; health care providers and services; biotechnology; life sciences tools and services; and health care technology.

Next week, 26.59% of CURE's underlying index steps into the earnings confessional, according to issuer data. CURE's potential as an earnings-driven trade does not, however, cease next week. The following week, nearly 40% of the Health Care Select Sector Index reports earnings.

More Catalysts for U.S. Economy

There are other catalysts to consider, including that the U.S. economy is moving into the late-cycle phase, overall growth may slow and signs of an economic slowdown could pop up. Consequently, investors may also turn to defensive sectors that are less economically sensitive, such as health care.

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While the healthcare sector is not necessarily stretched on valuation, stock pickers ought to be selective in the group, which is the second-largest sector weight in the S&P 500.

CURE is usually one of the least volatile equity leveraged ETFs in Direxion's lineup, but traders should still treat it as they would any other leveraged ETF.

“Leveraged and inverse ETFs pursue daily leveraged investment objectives which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day,” according to Direxion.

Traders have added $7.26 million to CURE since the start of 2019.

For more on leveraged & inverse ETFs, please visit our Leveraged & Inverse Channel.

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