Gavekal Capital: Utilities: A Contrarian Play

Thursday, January 9, 2014

Utilities: A Contrarian Play

One of the ways we assess the technical strength or weakness of various areas of the stock market is by measuring the percent of stocks above a 200 day moving average. When 80% of stocks are above their 200 day moving average, we consider this to be a symptom of an overbought market, and when only 20% of stocks are above their moving average, we consider this to be a symptom of an oversold market. When we divide out all the region-sectors within the MSCI World index, there are only two that grab our attention as being oversold--North American and Asia-Pacific Utilities.

About Gavekal Capital

Gavekal Capital is a US registered investment advisory firm that manages the Gavekal Knowledge Leaders Strategy. Knowledge Leaders are a group of the world’s leading innovators with deep reservoirs of intangible capital. These companies often possess competitive advantages such as strong brand, proprietary knowledge or a unique distribution mechanism. Knowledge Leaders are largely service-based and advanced manufacturing businesses, often operating globally. Gavekal Capital seeks to identify the world’s leading knowledge companies through a proprietary process that analyzes corporate knowledge investments.
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