Health Care (Especially Contract Research Organizations) Is on the Mend

We have seen a big rotation the past 2-3 sessions into healthcare; up and down the food chain. The thesis appears to be: as details of Obama-care become more fine -tuned there is less confusion, and bad news is better than uncertainty in the stock market.

One group that was mauled last year were the contract research organizations; as credit was shut off and healthcare firms were under fire, these stocks swooned. As I looked at some better-performing groups not named "technology" or "commodities," I see a lot of relative strength here. I showcased 7 names from this group here about a year ago as we built a basket around this group [Aug 13, 2008: Bookkeeping - Creating a CRO Basket]

As with anything in this market now, the question is whether to chase or not. If you chase early enough, you are safe, if you chase late, you get punished. Below are some charts of the major players I have been following... from the looks of it (remember this is a market dominated by broad themes and sector allocations, not individual companies) the institutions moved into the entire sector about 3 weeks ago. These companies all operate in different parts of the outsourcing food chain, but to HAL9000 and program trading friends they are all the same.

Parexel (PRXL) broke over the 200 day line Thursday with Icon (ICLR) poised next - the others are still quite a ways ago (so far in fact, their 200 day moving averages do not show up in the scale of these charts)

No positions

Comments

[rrtzmd:]

...no disrespect but your pithy analyses would merit more consideration if they translated into portfolio performance...but looking at yours:

simulator.investopedia...

...well, that looks like you've done little more than spin your wheels for six months...that and made a lot of commissions for your broker...maybe you should focus on one aspect -- long, short, options, etc -- rather than trying to handle all of them in one portfolio...

Jun 19 11:11 AM

[Pax Americana:]

Nice Article Mark!...Good detail and analysis, as per usual, all ways enjoy your Articles. As well as the update on the sector rotation, currently in Vogue.

Jun 19 12:09 PM

[TraderMark:]

Dear "I always Win All the Time" - I apologize for my lacking performance the past 8 weeks. I was up 15% YTD through end of March and have since given it all back mostly due to short sgone awry in a market than only goes up. I did not realize commercial real estate was the sexy investment once more and lost many gains in that space. I don't have my 2007 or 2008 performance in that simulator but I was beating the market by 30-40% using almost only all longs and no individual shorts during that time frame. It would of been far better if I could of actually shorted many names I called out in my blog as destined to swoon. I switched to this platform in January because it better suits how I like to run a portfolio.

I am sorry that you find my performance lacking for your tastes, but clearly you can choose not to read any pieces by me. I also enjoy being chastised by people who don't put their track record out publicly and get to hear the cat calls for each and every call. I call that pithy :)


On Jun 19 11:11 AM rrtzmd wrote:

> ...no disrespect but your pithy analyses would merit more consideration
> if they translated into portfolio performance...but looking at yours:
>
>
> simulator.investopedia...;GameID=98733
>
>
> ...well, that looks like you've done little more than spin your wheels
> for six months...that and made a lot of commissions for your broker...maybe
> you should focus on one aspect -- long, short, options, etc -- rather
> than trying to handle all of them in one portfolio...

Jun 19 01:21 PM

[rrtzmd:]

...well, mercy!...are we a little bit sensitive or what?...personally, I admire that your portfolio, trades, and performance are available for scrutiny...that puts you leagues ahead of most of the pundits...and, true, I don't make my track record public...on the other hand, I'm not trying to market myself as a financial adviser or portfolio manager...I'm simply stating a fact -- performance speaks loudly...until you can demonstrate clearly that you have a handle on the market sufficient to at least keep up with it, your opinions will lack credibility...


On Jun 19 01:21 PM TraderMark wrote:

> Dear "I always Win All the Time" - I apologize for my lacking performance
> the past 8 weeks. I was up 15% YTD through end of March and have
> since given it all back mostly due to short sgone awry in a market
> than only goes up. I did not realize commercial real estate was the
> sexy investment once more and lost many gains in that space. I don't
> have my 2007 or 2008 performance in that simulator but I was beating
> the market by 30-40% using almost only all longs and no individual

Jun 19 04:50 PM

[TraderMark:]

and that was my point to you - since aug 2007 when I started the website I am beating the S&P handily. my portfolio was not down 20, 30, 40, 50% in 2008 like the peer group I am 'competing against'.

In 2009 after outperforming earlier I am back flat with the indexes.

That was my only point.

Jun 20 03:31 PM

[TraderMark:]

One other point, I say pretty much every month on my site it is much harder to be a portfolio manager than a forecaster. Being a forecaster means figuring out reality; being a portfolio manager means figuring out the crowd's view of reality.

That said, most forecasters completely missed this - I could very easily just of handed out forecasts and sat on that record which beat 99% of the guys paraded on CNBC each day.

Here is one such post which turned out to be the "official" beginning of the recession point (Dec 2007) but the punditry was saying we were just fine, the Fed had saved us, look the sovereign funds are buying financials, everything is fine -

www.fundmymutualfund.c...

So again, being "correct" on the story and being "correct" on the madness of crowds are two completely different things...

I'm still working on figuring out the crowd after many years at this, because being right and early can cost you a lot of money as the crowd drinks Kool Aid.

Jun 20 03:36 PM