The Healthcare index has a market capitalization of about 12.5 billion which is less than 1% of the TSX composite index. Some Canadian companies you may recognize that are included in the healthcare index are Biovail Corporation (BVF), Cardiome Pharma Corp (COM), CML Healthcare Income Fund (CLC.UN) and MDS Inc. (MDS).

The price of the healthcare index closed at $35.31 on Monday September 8, 2008. The high this time last year was $44.74 on October 5, 2007 and the low over this time last year was $34.24 reached on July 11, 2008. From the peak to trough this has been a decline of –22.3%, which is worse than both the S&P 500 in the US and the S&P/TSX in Canada. There have been short periods where the price has rallied, however, the long-term trend has been down. It is technically bearish at this point with the current price below the 50-day and 200-day moving average. The next level of support is at $34.24.

From a different perspective the average dividend yield is 5.53%, which is extremely attractive with bond yields being under 4%. With aging baby boomers and new developments in the medical field, I can’t help but think healthcare is going to grow as an industry in Canada. Having been beaten down by an over riding economic cloud and deteriorating macroeconomic conditions, it should be on your radar screen as a potential growth theme in your portfolio. Don Vialoux at (www.dvtechtalk.com) did a study where he examined Canadian and U.S. sectors. His results showed that between November and February, the average return over the last 10 periods was 7.6% for the healthcare sector with 6 out of 10 trades being profitable. This suggests there may be an opportunity to take advantage of sector seasonality, however, this is the lowest success rate of all sectors and last year was not a good example of this opportunity.

Right now the news and the technicals don’t support a buy.