Eoin Treacy's view I highlighted the outperformance of biotech shares in Comment of the Day on Tuesday. and reviewed a number of high yielding pharmaceutical shares on July 3rd.

While the cutting edge of technological development in the healthcare sector has the capacity to inspire investor interest, healthcare also exhibits significant defensive qualities and large cap pharmaceuticals have some of the most attractive yields of any asset class. As a result they have outperformed over the last few months as more industrially oriented sectors have laboured under the assumption that global growth is on a downward spiral.

The Nasdaq Healthcare Index has become somewhat overextended relative to the 200-day MA and mean reversion appears likely. However, a sustained move below the trend mean would be required to question medium-term upside potential. The Euro Stoxx Healthcare Index has also performed impressively but is equally susceptible to mean reversion.

The FTSE-350 Healthcare Index has held a progression of higher reaction lows since October and is now testing the upper side of the 10-month congestion area. A sustained move below 3200 would be required to question potential for continued higher to lateral ranging. S&P/ASX Healthcare Index rallied impressively from the October lows to test the psychological 9250 area. While still somewhat overextended relative to the 200-day MA, a sustained move below the 200-day MA would be required to question potential for a successful upward break.

The Japanese Pharmaceuticals sector rallied to break the 5-year progression of lower rally highs in March and found support above the December lows in June. A sustained move below 90 would be required to question medium-term recovery potential.

Both the Thai and Indian healthcare sectors are heavily influenced by the medical tourism industry. The Thai Healthcare sector has been accelerating higher but hit at least a short-term peak near the psychological 2500 this week. Mean reversion is most likely underway but a sustained move below the 200-day MA would be required to question the integrity of the medium-term uptrend. The Indian Healthcare sector hit a medium-term peak in January 2011 and spent much of the last 18 months ranging. It moved to a new all-time high this week and a clear downward dynamic would be required to question potential for additional upside. Singapore is also prominent in the medical tourism sector but its healthcare sector has lagged somewhat over the last few months. It posted a large weekly key reversal in February and has pulled back to test the lower side of the underlying trading range. The Index needs to continue to find support in the region of 1200 if the medium-term upside is to continue to be given the benefit of the doubt.

The S&P/TSX Healthcare Index has pulled back steadily towards the 200-day MA and the upper side of the underlying trading range since late April. It will need to find support in the current region if the medium-term upside is to continue to be given the benefit of the doubt.

Following a steep decline, the Chinese S&P/Citic 300 Healthcare Index found support near 3000 in January and has held a progression of higher reaction lows since. A sustained move below 3225 would be required to question recovery potential.

From an investment perspective, the UK listed Worldwide Healthcare Trust (2.4%) trades at discount to NAV of -8%. It has rallied for the last five consecutive weeks and hit at least a near-term peak this week. Mean reversion is looking increasingly likely but a sustained move below the 750p area would be required to question medium-term scope for additional upside. (Also see Comment of the Day on January 26th).