Eoin Treacy's view Healthcare represents a confluence of important long-term themes. At one extreme, pharmaceutical companies push the boundaries of technology to come up with new life enhancing treatments. At the other extreme, long established companies do not grow as quickly but pay some of the most reliable yields and have some of the best cash flows of any sector. In addition, the rise of the middle class puts healthcare within reach of millions of new consumers every year. The Autonomies theme we have been developing for more than six months is well suited to the type of company that benefits from this evolution.

On October 28th I posted a piece on base formation completion in the healthcare sector. This focused on the biotech firms which were breaking out of multi-year bases. A number of those shares have since pushed on to post impressive new highs. A similar set of circumstances is currently falling into place in another part of the healthcare sector.

Eli Lilly is a former dividend aristocrat and currently yields 4.86%. The share completed its base in December and pulled back to test the upper side and the 200-day MA over the last few months. It is now rallying toward the earlier high and a sustained move below the MA would be required to check recovery potential.

If Eli Lilly were alone in possessing such an attractive yield coupled with a compelling chart pattern it might be attributable to a single story. However, GlaxoSmithKline (5.44%), Pfizer (4.01%), Merck (4.41%, Bristol Myer Squibb (4.09%) and Abbot Laboratories (3.44%) share the high yields and are all also in the process of completing or pulling away from lengthy bases. This commonality suggests broader interest in the sector and a more promising medium-term outlook.

Although they do not possess the yields of the above shares Varian Medical Systems, Opko Healthcare, Alkernes, Elan, McKesson and Shiff Nutrition are all worthy of mention because of the consistency of their medium-term uptrends. Provided they continue to find support in the region of their respective MAs, the medium-term upside can be given the benefit of the doubt.