The market just wrapped up one of the more volatile quarters in market history. According to Standard and Poors, over 55% of the trading days this year have been 1% or more moves in the SP500 index. That's the highest since 1938. Of course, the market was essentially rangebound for a few years following 1938, so this historic volatility may not signify an end, beginning, bottom or top. In these markets, there are a lot of dead end indicators, but I still find dependable answers to the market's madness in looking at sector moves.

Healthcare's Bad News
If we are in a recession, and historical patterns continue, then Healthcare should perform better most sectors, right? Not exactly, in fact, the recession friendly sector is performing near the bottom along side Telecom and Technology. Take a look at the graphs below, the YTD graph on the top shows Healthcare as the second worst performing, second only to technology. While the other graph shows last month's performance and Healthcare is the worst performing sector. The S&P 500 is down 6.18% over the same time period, hardly a better investment.

Sector % Change Performance YTD 2008


Sector % Change Performance March 2008


Same Symptoms, Wrong Diagnosis?
At this point, the recession debate is an established point. It's now a question of how close we are to the end. With Bernanke on Capitol Hill warning of a recession, you can bet that we've been in one for at least a month or more. People still need their medications and the necessary treatment, in this regard the current recession is not unlike any other. So, why are Healthcare stocks so bruised and neglected? Would you like the good news or the bad news?

In almost every recession and each of the last three, Healthcare stocks have out performed the S&P 500. Considering logic, you can assume that in Healthcare stocks will not be the worst performing sector in future recessions. This divergence is abnormal. With this insight, we may assume one of two outcomes: either the recession is being avoided or the worst has yet to come.

The fundamental argument this raises is whether or not we are in a recession. I know, you were looking for the definitive answer. Unfortunately, we'll have to wait in line for NBER to release that data years after the fact. We've all heard that the Healthcare sector performs better than average in economic contractions, but why are things any different this time? The symptoms of a recession have shown in recent months, I believe the worst has yet to arrive. Rest assured when the diagnosis is made, the Healthcare sector will be a respectable value.

Price Headley is the founder and chief analyst of BigTrends.com.