Sam Collins, InvestorPlace.com’s Chief Technical Analyst
Click to Enlarge “A common mistake made by investors is to confuse short-term and long-term implications. The health care law does not go into effect until 2014, and then only if it isn’t thwarted by Congress. Today’s news might be quickly forgotten. However, the initial impact of the ruling, which came at just after 10 a.m., was to drive the S&P 500 down through its initial support at 1,315, with a low of 1,314 at about 10:30 a.m.
“Most analysts agree that the ruling should benefit hospital stocks, and Tenet Healthcare (NYSE:THC), HCA Holdings (NYSE:HCA) and others all broke downtrend lines on the news. Clinical labs also should do well, and stocks like Quest Diagnostics (NYSE:DGX) are sharply higher. But some groups, like the health insurers, did not fare so well: Aetna (NYSE:AET) and WellPoint (NYSE:WLP) were all sharply lower. But if these stocks can hold their recent lows the negative reaction could offer investors an excellent buying opportunity. The law imposes a 2.3% excise tax on all medical devices sold in the U.S., other than some personal items, and so medical equipment makers like Boston Scientific (NYSE:BSX) and St. Jude Medical (NYSE:STJ) likely will be hurt in the short term.”
Get Sam’s take on the charts every morning via his Daily Trader’s Alert.
Richard Band, Profitable Investing
“Ever since Obamacare passed (and even before), most stocks in the health care industry have traded at historically low valuations, reflecting concerns about whether the law would in fact be implemented, and how. Today’s ruling hasn’t put all those questions to rest, but it does eliminate some of them. For example, it’s now pretty clear that managed-care providers like Wellpoint (NYSE:WLP) will be receiving a large influx of new subscribers in the years ahead, even if many of these folks come in through state-sponsored insurance exchanges, where profit margins are likely to be lower than on traditional managed-care business.”
Read more in Richard’s full article, “WellPoint May Be Surprise Winner in Surprise SCOTUS Ruling.”
Eddy Elfenbein, Crossing Wall Street
“The Dow instantly fell 100 points, but honestly, that’s just nervous traders who’d get scared of their own shadow. Bear in mind that the since the Senate originally passed the bill on Christmas Eve 2009, the Dow has gained 2,000 points. Of course, I’m not saying that it caused the rally, but it didn’t prove to kill it either. Also, most of the mandates don’t start until 2014, and there will be a lot of politics between now and then.”
Read more on Ed’s blog, CrossingWallStreet.com.
Louis Navellier, Blue Chip Growth
“The first and the easiest-to-digest reason behind the declines is that the decision doesn’t give the market any more certainty about the future of health care than we had yesterday. The truth is that we have an election in a few months, and one of the parties is, to put it lightly, against the health care plan. The second reason the market didn’t rally is the cost of the plan. What most Americans don’t realize is that everyone will be paying 3.8% in taxes to foot the bill for the Affordable Care Act. That said, every single day, 10,000 new people qualify for Medicare. That is a demographic you can’t argue or legislate away. This group of Americans will need doctor’s visits, medical tests and prescription drugs. So, health care will remain a growth industry regardless of the changing political and legislative environment.”
Read more of Louis’ take on the health care law and opportunities in biotechs and insurers on NavellierGrowth.com.