Health Care is one of the largest sectors in the Russell 2000, making up 17%—just behind Financials at 19% and Industrials at 17.5%.
That makes it a key player in the small-cap space, often overlooked but packed with information.
I often use this sector to gauge where small boys are headed next.
After a brutal drawdown in 2022-2023, the Small-Cap Health Care ETF $PSCH is finally knocking on the door of a major trend reversal.
This is the same pattern we saw in major indexes and tech stocks early last year—massive bases resolving higher, marking the beginning of new bull trends.
You can see how this pattern has evolved in PSCH during this cycle.
It started with a downward-sloping 200-day moving average and a bearish momentum regime, keeping these stocks under pressure. But as buyers stepped in and demand overwhelmed supply, momentum shifted. The moving average flattened, then turned higher, confirming the transition to a bullish phase.
Now, we have a rounding bottom formation just completing, signaling that a fresh uptrend is underway for these stocks.
If history is any guide, this could be the beginning of a sustained move higher.
This action in PSCH can only bode well for small caps as a whole.
HIMS is the largest holding in PSCH—and for good reason. It’s been ripping higher in a near-vertical move lately.
