The Trendrating Momentum Model is designed to capture medium- to long-term trends lasting a few months to a few years. The model filters out noise using 357 indicators based on price, arriving at eight that work together. A self-adapting algorithm adjusts the time duration of the indicators on the basis of short-term volatility. We provide a rating scale (A, B, C and D) based on the strength of the indicators where “A” signifies a strong bull trend and “D” an established bear trend. A security with six positive indicators receives a “B” rating, indicating the beginning of a bull trend. When all eight indicators are positive, the security is rated “A,” signifying an established bull trend.
Healthcare was the worst performing sector in the S&P 500 during the three months ending Oct. 27 with a return of -7.5%. This report will utilize Trendrating’s Smart Momentum analytics to explore momentum within the U.S. healthcare sector.
“Health report” shows the current distribution of momentum in the United States Health Care sector.
As we can see from the diagram, nearly 52% of this universe is trending negatively with more than half of these in an established negative trend (D rated). Since late July 2015, about 40% of this universe has experienced a shift to negative momentum while only 10% has moved to positive momentum. It is also worthy to note that the positively rated stocks are adding to the performance of this universe while the negatively rated stocks are not.
While the majority of U.S. healthcare stocks currently are exhibiting negative momentum, Trendrating has identified five positively trending funds with good upside potential (see “In the pink”).