Last week I wrote about Banks and Miners. This this week I could easily do the same, both having moved handsomely again. But I’ll leave my colleague to discuss why. I’m more interested in a quartet of bullish breakouts within a sector that tends to get overlooked. Unfairly so in my opinion. Oft considered too defensive, Healthcare tends to be seen as less likely, perhaps even unable, to offer enough share price movement for traders to capitalise on in the short-term. This may be true some of the time, but by no means all the time. The exception rather than the rule.

Since 2014, when US mega-pharma Pfizer was unsuccessful in its bid for AstraZeneca (AZN) and stateside biopharma giant AbbVie (ABV) failed to gobble up specialty pharma Shire (SHP), the sector is far more exciting. Takeover speculation is a regular occurrence. Promotion of generic drug manufacturer Hikma Pharmaceutical (HIK) to the UK 100 this year has also helped improve the sector’s image, delivering attractive share price moves in the short term as well as offering longer-term trends which are both easy to identify and piggyback for momentum.

This week has been no exception with the full contingent of UK 100 healthcare names – AstraZeneca, GlaxoSmithKline (GSK), Hikma Pharmaceuticals, Shire – all confirming bullish reversals via breakouts from downtrends of between one and three months that saw each give up anywhere between 15% and a whopping 42%. Drug news may have been thin on the ground by a host of drivers remain positive. A Trump US presidential win means fears of a Clinton clampdown on unethical drug pricing have evaporated. A weak GBP since Brexit and a strong USD via Trump’s stimulus plans and a rate-hiking Fed also makes their foreign earned profits worth more in GBP terms. A favourable environment I’m sure you’ll agree.

Share price bounces of 5-10% accompanied by bullish breakouts from downtrends are rarely ignored. What is ultimately more attractive, however, and the reason so many are attracted back to trade the sector, is the recovery potential each stock now offers. If they can rally back to the highs from whence they fell there is upside potential of anything between a very decent 13% and a stunning 51% on offer. Moves not to be sneezed at whether you are a short-term trader or long-term investor. Very healthy returns when compared to paltry bank interest rates and still low bond yields.

Perhaps it’s time for you to take the pulse of your preferred sector to decide which stocks offer you the best trade opportunity and upside potential. If you’d like us to help, get access to our research now. We have been highlighting several of the above mentioned healthcare names for over two weeks now in our Another Level publication, while they bottomed out, bounced and then began to break higher. Be sure you don’t miss the next profitable opportunity we spot. Let me trawl the charts for you. It’s my job after all, and I’m here to help you as clients.

Have a nice weekend

Mike van Dulken, Head of Research, 16 Dec