PILL Hasn't Been a Bitter ETF to Swallow The Past Month

The Direxion Daily Pharmaceutical & Medical Bull 3X Shares ETF (PILL) is up about 20% the past month, which is making it an easy pill to swallow for traders looking to capitalize on this sub-sector of health care. With the Covid-19 pandemic still in full swing despite a global vaccine in its initial phases of deployment, more focus on the pharmaceutical and medical industry could come in 2021.

PILL seeks daily investment results, before fees and expenses, of 300% of the daily performance of the S&P Pharmaceuticals Select Industry Index. The fund invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments and securities of the index, ETFs that track the index, and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index.

The index is a modified equal-weighted index that is designed to measure the performance of the stocks comprising the S&P Total Market Index that are classified in the GICS pharmaceuticals sub-industry.

“The biotech corner of the broad healthcare sector has been an area to watch lately buoyed by encouraging development in coronavirus vaccines from Moderna MRNA, Pfizer PFE, and AstraZeneca AZN and hopes of their availability soon,” a Nasdaq article noted. “Britain began Pfizer’s vaccinations last week while Canada plans to roll out vaccination this week after approval. The FDA also authorized Pfizer’s vaccine for emergency use in people aged 16 and older.”

PILL Chart

PILL data by YCharts

Looking at its three-month chart, the fund crossed above its 50- and 200-day moving average in early October before dipping back below these averages just before the start of November. When November did come around, which ended up being a strong month for equities in general, PILL moved back up past its 50- and 200-day moving average.

In terms of looking for a short-term entry point, the relative strength index (RSI) shows the fund has yet to still breach overbought territory. Traders may want to keep an eye on the RSI level as well as the 50-day moving average to locate an area of value where ideal buying could occur.

We can see that trader interest in PILL was higher during the month of October and then again in the beginning of November. The start of December also saw an uptick in volume, which could mean traders are eyeing a potential move to the upside just before the year’s end.

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