(Health care reform article updated from March 23 with the addition of multiple analysts, Wednesday news and stock market movements, and additional insight into the impact of health care reform.)

NEW YORK ( TheStreet) -- Health care reform is a political reality -- so does health care again make sense as an investment story?

The buoyant atmosphere surrounding health care reform reached its zenith on Tuesday, when President Obama signed it into law. Health care reform had been written into law in late 2009, before it was written off in the Scott Brown era, before it was resurrected.

The action in health care stocks on Monday and Tuesday was intense as a result of President Obama's victory in making the most sweeping changes in the U.S. health care systems in decades.

It's a more complicated question than the bullish sentiment since the sudden passage of health care reform alone would suggest. It's a question that, in fact, may require health care investors to assume an investment horizon stretching out as far as 2014.

Since many of the benefits from the health care reform package will not come into play until 2014, all health care investors may be placed in a boat familiar to pharmaceutical stock investors specifically, who are accustomed to wagering on a multi-year drug pipeline probabilities.

Democrats may have "found god," as some commentators have suggested, in the parliamentary tactic known as reconciliation. For investors, though, there is no divine-like revealing of the specific health stocks to worship as investment saviors in the new health care era.

The conventional wisdom dictates that with the uncertainty related to reform finally removed, it's time for health care investors to come off the sidelines.

Monday's rally was greatest in the hospital sector and with stocks linked to Medicaid coverage, while on Tuesday many of these stocks ran into resistance, having achieved 52-week high marks just a day earlier.

Big pharma long ago cut its deal in Washington D.C. to minimize negative repercussions from the health-reform effort, yet big pharma stocks were also up modestly on Monday. And the fact that big pharma cut its deal with Washington D.C. way back when is part of the problem, actually.

Timing is everything in investing. So is it the right time to get into health care just because the year-old political saga is ending?

Health care analysts said on Monday that sentiment about health care clearly changed as a result of victory for President Obama's health care reform plan. However, a change in sentiment is not equal to a change in health care-stock fundamentals.

A Lazard Capital Markets research note on Monday depicted some of the health care investing in broad brush strokes, stating that the health care reform bill "impacts sentiment more than fundamentals." Yet Lazard Capital Markets analyst Tom Gallucci also wrote, "On the surface the passage of the bill by the House lends an element of increased certainty for now in terms of the playing field for health-care providers."

Tenet Healthcare ( THC) closed up more than 9% on Monday, yet was down by close to 4% on Wednesday at midday.

In fact, all of the hospital stocks that led Monday's rally were on declining trends on Wednesday. Health Management Associates ( HMA) ended up 11% on Monday, but was down 1.5% at midday Wednesday, after a negative day on Tuesday, too.

Community Health Systems ( CYH) was down more than 3.5% on Wednesday, matching Tenet's negative turn.

If the investing time horizon for health care requires investors to take a view as far out as three years, all the action in the hospital stocks -- first up and then down across the first three days of this historic week -- may be evidence that investors are not sure what to make of it all, even with the uncertainty related to health care reform finally removed.

Is this week the beginning of a rally that can push health stocks much higher, or merely the sign of investors who have been on the sidelines coming back onto the health care investor field of action at a moment when most of the stocks should be rated at hold based on valuation? The answer to this question has to take into account whether investors believe that the multiples of health care stocks have been held back by the uncertainty over health care reform, too.

Tenet, Health Management Associates, and several other stocks that stand to benefit from the brave new world of health care have already been trading near 52-week highs.

Tenet was the top-performing stock in the S&P 500 Index in 2009. Granted, Tenet's 2009 rise was the rise of a stock that was at a trough point. However, having recovered from the trough in 2009, how much more room does Tenet have to go still higher, especially with the health care reform not changing the fundamentals of the business today or tomorrow?

Health Management Associates has been climbing steadily since the middle of 2009, when its share price was half of the 52-week high that it hit on Monday at $8.99.

For Tenet the timeline to share price rehabilitation has been similar: Tenet shares were trading near $1 at the beginning of April 2009, and have climbed steadily since that time.

On the Medicaid provider front, some of the stocks expected to benefit from the health reform plan have held up better in this week's rally than the hospital stocks specifically.

Centene ( CNC) ended Monday up close to 11%, and its Monday volume of 3.3 million shares traded was six times its average trading volume of 550,00 shares.

Centene managed positive gains on Tuesday, and at midday Wednesday was up again, to $24.43. Its sector peer Amerigroup ( AGP) was also in modest positive territory on early Wednesday afternoon.

Unlike Tenet and HMA, though, Centene was on a trough trend for much of 2010, with shares falling as low as $17.87 in late January. Centene shares gained $2.31 on Monday, to close at $24.14, and the stock hit several 52-week high points during Monday's session before closing 8 cents below the new high of $24.22.

HMS Holdings ( HMSY) which led the rally in Medicaid-related stocks, and finished Monday up more than 9%, was having a few days of reality on Tuesday and Wednesday. HMS shares lost more than $2 from a Monday high over $53 a share, to $50.98 at midday Wednesday.

Pharmaceutical stocks like Merck ( MRK) and Pfizer ( PFE) were also up, but with modest gains on Monday that couldn't be compared to the rally in the hospital and Medicaid-focused stocks.

By Wednesday midday, Pfizer continued on a three-day upswing, while Merck was headed down for the first time this week, with a loss of 1%. On Tuesday, Merck only finished down by 7 cents, but on Wednesday Merck shares had lost 37 cents by the midday mark.

Prescription benefit manager Express-Scripts ( ESRX) hit a 52-week high above $103 on Monday, but by midday Wednesday was back to $101.35.

All told, lots of action in health care, and big gains from the hospitals and Medicaid stocks and big levels of trading. Still, with the stocks all hovering near or attaining 52-week highs on Monday, the early week lift left something to be desired by health care investors on Wednesday.

It may come down to your view on whether Monday's rally was a sentiment-led moment of market exuberance for the health sector, or pent-up demand from investors who have been waiting for the right moment to return to the health care sector, believing that with health care reform a reality, fundamental changes will push these stocks still higher -- especially for those stocks, like the drug stocks, trading at relatively low multiples.

So how about you: Are you certain that health care uncertainty has vanished, or do you find the sudden "certainty rally" a reason to be skeptical about health stocks?

Indeed, all the health care investing action on Monday begs the simple question, What's your outlook on health care stocks now that the health care landscape in the U.S. is set to change irrevocably? Take the poll below to learn the consensus of TheStreet.

What's your outlook on health care stocks?

The hospital stocks like Tenet are just getting healthy.
It's all about Medicaid plays, and now is the time to wager, not 2014.
These 52-week-high levels represent a short-term ceiling in health stocks.
Managed care stocks are such a reform "dog" I'd favor them for value.
Drug stocks are not rallying as they should; they will be the quiet winners.

-- Reported by Eric Rosenbaum in New York.

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