SAMT Blog
Health Care: a sector to watch
22. July 2023, by Mario V. Guffanti
Technical Analysis
The global Healthcare equity sector was particularly weak in 2023, performing in USD by about a couple of points, versus the MSCI World Index, which had a year-to-date performance of 16.37%.
It fared much better last year, when the Health Care sector demonstrated its ability as a defensive sector, with a drop of 6 percentage points, against that of almost 20 points of the MSCI World index.
This week, some interesting indications are starting to appear on the charts.
If we look at a graph with daily data, we can see that in the last period there has been a construction of the price level with higher lows (green arrows), and in these last two days the price has broken the short-term trendline and the upper Bollinger Band (1). The RSI is just below the 70 level (2) and the MACD has crossed the zero line (3).
 Msci Health Care Index daily data.JPG "Msci Health Care Index daily data")
On the weekly chart, this week's candle closed above the medium-term downtrendline (a), and the oscillators are well set to the upside.
 Msci Health Care Index weekly data.JPG "Msci Health Care Index weekly data")
On the monthly data we note that the price is currently above the 12-month moving average (1) and the oscillators are on the top of a sideways trend. To have further confirmation, the current candle should close at the end of the month above the 12-month moving average and the oscillators need a more marked upward reversal, to overcome the current levels.
 Msci Health Care Index monthly data.JPG "Msci Health Care Index monthly data")
Looking instead at a graph of relative strength between the Health Care sector and the MSCI World Index, we can see that the level of the relative strength ratio is approaching a support zone where in the last ten years it has reversed six times (see the reversals indicated by the green arrows).
 Relative Strength Ratio S Msci Health Care Index daily data.JPG "Relative Strength Ratio S Msci Health Care Index daily data")
Each reversal generated a relative strength trend that led the MSCI Health Care index to outperform the global equity index in a range between 8 and 22 percentage points. I report the dates and percentage movements in the table below.
 Msci Health Care ratio performnace.JPG "Msci Health Care ratio performnace")
In conclusion, we can say that the Health Care sector was already under observation due to the fact that the ratio is approaching for the seventh time an area that has been characterized in the last ten years by reversals that determine a certain statistical reliability. This weekend's further signals of price curve breakouts on short-term charts, accompanied by favorable, albeit early indications on longer-term charts as well, suggest greater attention should be paid to assessing opportunistic developments in the coming weeks.
About the author
Mario Valentino Guffanti is a board member and Head of the Lugano Chapter. He is a financial advisor, technical analyst and researcher based in Milan, Italy. As an author of technical articles and lecturer as well as instructor in technical analysis courses in Switzerland, he is also dedicated to financial coaching through NLP techniques (neuro-linguistic programming).
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