Something unusual happened in healthcare last week. On Friday, 100% of stocks in the XLV healthcare sector ETF finished the day higher. Every single one.
That’s only happened 34 times since the XLV launched in December 1998. The last time was in April, and before that, October of last year.
When it does happen, the forward returns are compelling. Historically, these full-participation days have been followed by the XLV gaining an average of 4.5% over the next three months, 8.1% over six months, and 13.2% over the following year. That compares to average returns of just 2.1%, 4.1%, and 8.8% on all other days.
The hit rates are even more interesting. Full-advance days show a 19% higher hit rate over three months, 15% higher over six months, and 14.7% higher over one year. Translation: you’re significantly more likely to see higher prices after these rare events.
Healthcare has been quietly rotating higher all year while everyone focused on tech and AI. That rotation isn’t so quiet anymore. We’re seeing 21% of XLV components hitting 52-week highs, the highest level since summer 2024.
Within healthcare, one sub-sector stands out: Life Sciences Tools & Services. These are the companies that make precision instruments and lab equipment for pharma, biotech, and research facilities. Three names in this group are either breaking out or setting up for breakouts right now.
Mettler-Toledo (MTD) – Breaking a Multi-Year Downtrend
Mettler-Toledo is the global leader in precision instruments and lab measurement solutions. The company serves pharmaceutical, biotech, life sciences, and industrial customers. Their Laboratory Instruments segment accounts for 56% of revenue.
The stock just took out its 52-week high with strong momentum. More importantly, it appears to be breaking a multi-year downtrend that’s been in place since 2021. When you look at the weekly chart, the stock has been locked in a descending pattern for years. Last week might have been the break we’ve been waiting for.
Citi has been raising price targets all year and recently went from $1,600 to $1,700, implying almost 20% upside from current levels. They’re citing strong margins, pricing power, growth in recurring revenue, and a string of recent earnings beats.
Support sits around $1,300. As long as the stock holds above that level, the technical setup looks strong. If Mettler successfully breaks this downtrend, there’s significant room to run higher after years of consolidation.
Thermo Fisher (TMO) – The Giant Setting Up
Thermo Fisher is the largest company in the Life Sciences Tools & Services category with a $220 billion market cap. The stock hasn’t broken out yet, but the setup is there.
A golden cross formed in September when the 50-day moving average crossed above the 200-day. That’s typically a bullish signal, especially for a stock this size. Thermo Fisher is now consolidating near its highs from earlier in the year.
The fundamentals support the technical picture. Thermo Fisher has scale advantages, diversified revenue across pharma, biotech, and academic research, and consistent execution. When a stock this large starts showing technical strength alongside sector momentum, it tends to follow through.
The risk is that it fails to break through resistance and pulls back. But given the sector dynamics and the company’s positioning, this looks more like a coiling pattern before a move higher. It’s worth watching closely and studying the fundamental catalysts that could push it through.
Agilent (A) – Just Below Breakout Level
Agilent was spun out of Hewlett-Packard in 1999 and has returned approximately 7x to shareholders since inception. The company makes analytical instruments, software, and services for life sciences and diagnostics.
The stock is sitting just below its 52-week high around $153. Technically, it hasn’t broken out yet, but it’s right there. If it gets through current levels, there’s minimal resistance until around $180 where it traded in summer 2021.
The 50-day moving average is rising, which is what you want to see in a stock setting up for a breakout. The risk is a failed breakout where it pops above $153 briefly then pulls back. If that happens, you step aside and wait for the stock to reset.
But given the sector momentum and the technical setup, Agilent looks poised to push higher. It’s slightly larger than Mettler-Toledo at $42 billion in market cap and operates in similar end markets, so it should benefit from the same tailwinds.
Why This Matters Now
Healthcare has been one of the more neglected sectors over the past few years as investors piled into tech and AI. That’s changing. The sector is showing breadth with 21% of components at 52-week highs, and we just saw a rare 100% up day that historically leads to strong forward returns.
Life Sciences Tools & Services is a particularly interesting sub-sector because these companies are leveraged to pharma and biotech R&D spending, which remains robust. They have pricing power, recurring revenue models, and operate in markets with high barriers to entry.
All three of these stocks are either breaking out or setting up to break out at the same time. That kind of coordinated strength within a sub-sector often leads to sustained moves higher as momentum builds.
Mettler-Toledo looks the most technically advanced, potentially ending a multi-year downtrend. Thermo Fisher is the giant with a golden cross and solid fundamentals. Agilent is right at breakout levels with rising moving averages.
If healthcare continues this rotation and investors keep rediscovering the sector, these three names are positioned to benefit. The historical data on 100% up days is compelling, and the technical setups align with that bullish backdrop.
