Probably the hot stock driver this weekend – Obamacare vote

S&P500 must have enjoyed quite a bit of uplift from the best performing healthcare sector. A 2-year market top for the sector faced with prospect of Obamacare repeal could frighten investors and trigger a broad market correction.


Potential impact when healthcare sector is also topping

One of US President Trump’s campaign promises was to repeal ‘The Patient Protection and Affordable Care Act’, often shortened to the ‘Affordable Care Act’ (ACA) and nicknamed Obamacare (see below). Obamacare was signed into law on 23 March 2010. Based on news, a vote scheduled for yesterday has passed and it appears that an agreement has not been reached yet.

From the charts, I think that individuals invested in the US stock market might want to follow ‘voting on Obamacare‘ closely – it could be the key driver for US stock indices tonight and possibly over the weekend.

This is a monthly chart of XLV – a healthcare sector ETF. Some observations:

  1. XLV more than doubled since Obamacare signed into law.
  2. Critically however XLV appears to have reached a major top in place since 2015.
XLV monthly chart from 1999 - present

XLV monthly chart from 1999 – present


Whether the Affordable Care Act itself is a moneymaker for the healthcare industry or not definitely the timing is convenient. On the other hand, XLV appears to have reached a major top that was in place since 2015. Consider investor psychology here. Markets don’t like surprises. So if the G takes away what appears to be good for the sector so far, investors might just take this as a trigger to exit combined with resistance at a 2-year top.

US healthcare sector best performer the last 5-years

US healthcare sector best performer the last 5-years | Source:

This heatmap shows performance of US stock sectors over the past 5 years.

  1. Healthcare sector is a prominent component of the S&P500 index.
  2. It was the best performer over the last 5-years.

The S&P500 index itself must have enjoyed quite a bit of uplift from the healthcare sector over this period of time. So again if healthcare is going to correct because of new direction from the new occupant of the White House, it might suck wind out of the whole stock market.


Trump’s top 10 campaign promises

Taken from this article ‘Donald Trump’s top 10 campaign promises‘.

1. ‘Build a wall’ — and make Mexico pay for it
2. Temporarily ban Muslims from entering the United States
3. ‘Bring manufacturing (jobs) back’
4. Impose tariffs on goods made in China and Mexico
5. Renegotiate or withdraw from the North American Free Trade Agreement and Trans-Pacific Partnership
6. ‘Full repeal of Obamacare’ and replace it with a market-based alternative

Trump’s call to repeal Obamacare and replace it with a marketplace alternative is popular among rank-and-file Republicans. Larger majorities in Congress would be needed for repeal.
“If a Trump win is accompanied by Republican control of both houses of Congress, then some significant rollback is feasible and likely,” said John McDonough, a health policy professor at Harvard University.

7. Renegotiate the Iran deal
8. Leave Social Security as is
9. Cut taxes
10. ‘Bomb’ and/or ‘take the oil’ from ISIS

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