One of the main drivers for the strong performance in the biotech and pharmaceutical industry is a lower corporate tax rate. As mentioned, these corporate tax breaks are helping to fuel the number of mergers and acquisitions taking place within the sector. Biotech’s sensitivity to politics could mean LABU is poised for increased activity following Tuesday’s midterm elections.

Mergers and acquisitions activity in the biotechnology arena is picking up in a big way to start 2018. Should that theme continue, short-term traders could potentially have ample opportunities to tap LABU.

LABU’s bearish counterpart is the Direxion Daily S&P Biotech Bear 3X Shares (NYSEArca: LABD). That ETF tries to deliver triple the daily inverse returns of the S&P Biotechnology Select Industry Index. That index is an equal-weight benchmark, meaning it leans toward mid- and small-cap biotech names.

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