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Tickers in this Article: HMA, CCM, UHS, IVC, GB
It's not hard to pick a winner when the market's tide is rising - pretty much everything is pointed higher. When the market started to unravel Tuesday, April 27, though, we saw an inordinate number of healthcare names showing up at the top of a short list of advancing stocks.

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Coincidence? Normally, I'd say yes. But given the possible pullback that could have been jump-started by Tuesday's marketwide scare - along with the unusually low volatility and high reliability we've been seeing lately from healthcare stocks - I can't help but wonder if we're seeing rotation out of risky arenas, and into more defensive ones. If so, it's a lead you'll want to follow until the coast is clear.

Before jumping to any conclusions, though, let's recap the news behind the moves to see if the gains were just reactive or a subconscious move toward safer havens.

Hospitals Healthier

Hospital network owner Health Management Associates (NYSE: HMA) was a double-barreled bull on Tuesday, topping first quarter earnings expectations by 2 cents per share (19 cents rather than 17 cents), and matching its Q1 2009 EPS number. HMA was then the beneficiary of an upgrade to "positive" by Susquehanna Financial. The stock jumped 5% and then another 2.5% on Wednesday.

Concord Medical Services (NYSE: CCM) shares were up firmly on Tuesday following news that the outfit would be acquiring four radiotherapy and diagnostic units in China's Hebei province.

Normally such an acquisition, though inspiring, would be an accounting wash - more revenue, but the purchase expense eats into the incremental profit. In Concord Medical Services' case, though, the 24% improvement in its Q1 revenue and the accompanying swing to profit was attributed to the addition of more revenue-bearing units. In other words, the acquisitions here might actually pay off.

Hospital chain United Health Services (NYSE: UHS) shares also rallied 5.5% on Tuesday following its April 26 announcement of Q1 results. Revenues were higher by 3%, while net income was up 7%. Not bad. Not a game-changer, but not bad.

Medical Equipment Expectations High

Medical appliance and equipment maker Greatbatch (NYSE: GB) saw its shares rally 3.2% on Tuesday, perhaps largely driven by speculation about what Thursday's (April 29) earnings call might have in store. However, on Wednesday, these shares fell back to previous levels.

Invacare (NYSE: IVC) shares were up 3.2% on Tuesday and have been up about 4% for the last week and a half. Most healthcare stocks (and the market for that matter) were down for that time frame.

The reason for Invacare's strength on Tuesday? None. The only recent catalyst the stock would benefit from would be last Thursday's earnings news - operating earnings increased by 77%. During earnings season, though, four business days may as well be four months.

Reality Check

I applaud the results and achievements in all five cases, but let's face facts - most companies have beat earnings estimates for the first fiscal quarter of 2010, yet most stocks also got trashed on April 27. What made these names (and these certainly weren't the only bullish healthcare stocks for the day) different than the rest of the market's stocks? Not much, other than the gains. None of the news was earth-shattering, to be sure.

What I suspect we're really seeing is a defensive move into safer sectors and industries at a time when investors are sensing a pullback is overdue, largely driven by the downgrade of Greek debt. Whether it's smart or value-oriented is irrelevant - if it's happening, it's happening.

No, one day doesn't make a trend, but when two very specific groups - as a whole - overcome a very bearish day, there's often more to the story. And frequently, there's an underlying trend to boot.

Bottom Line

Medical equipment makers and hospitals should be on your radar based on their new relative strength. More of the same may be in the cards. (Perform a thorough checkup to uncover a medical stock with a clean bill of health. For further reading, see Investing In The Healthcare Sector.)

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