Gavekal Capital: Healthcare Looks Extended

Tuesday, January 14, 2014

Healthcare Looks Extended

While it wasn't the best performing sector in the MSCI World index over the last year, healthcare was near the top of the pack.  Our equal-weighted formulation of the MSCI World  healthcare index was up +33.33% over the last year, placing it in third place behind information technology (+35.68%) and consumer discretionary (+34.99%).

Performance (%)

Considering several metrics, the healthcare sector looks somewhat extended.  First, the sector is only 6% below its high over the last year, putting it closest of all sectors to its recent highs.

Price Relative to High

Second, healthcare is the sector with most members over their 200-day moving average.

Percent of Companies Above Moving Average

And third, with 80% of all healthcare stocks up over the last year, the sector has had the strongest breadth over the last year of all sectors.

Net Positive Performance