Gavekal Capital: Longer Term Trends Have Reasserted Itself In May

Thursday, May 21, 2015

Longer Term Trends Have Reasserted Itself In May

Remember back in April when we noted how equity trends had completely flip-flopped during the first several weeks of the second quarter and we wondered aloud whether this was a trend change or simply a counter-trend rally? Well, so far in May the market is signalling that equity trends observed in April may have just been oversold (and well overdue) bounce.

To quickly review, at the end of April the performing sectors were energy, telecom and materials. These had been three of the worst five performing sectors over the past four years. Conversely, tech, consumer discretionary and health care were the three worst performing sectors in April. Meanwhile, they had been the three best performing sectors over the past four years.

Through yesterday, bull market leadership has reasserted itself. The best performing sectors MTD are health care, tech, and consumer discretionary. And the two worst performing sectors? You guessed it, energy and telecom. Materials have bucked the trend so far in May and are the fourth best performing sectors in May.

Even with the weakness in the energy stocks in May, the energy sectors continues to have the best performance in the second quarter. However, YTD, the energy sector is still the second worst performing sector just ahead of utilities and just behind telecom. As we approach the final month in the second quarter, it will be interesting to see if long-term leaderships continues with its May momentum.

Equity Returns As Of Tuesday, April 28th

Equity Returns As Of Tuesday, May 20th

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.
We offer the Gavekal Knowledge Leaders Strategy in multiple products for global investors. For more information about our product offerings please visit http://www.gavekalcapital.com.
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