A Technical Perspective on the Resilience of Knowledge Leaders

The stealth correction that has taken place over the last few months has not affected stocks equally. Indeed, the whole point of the stealth correction is that the majority of stocks get hit hard while a few more resilient stocks just seem to deflect that negative momentum and are able to hold up the headline indexes. It seems that once again those more resilient stocks are the most innovative companies in the world – Knowledge Leaders – that have insulated themselves from competition more than their peers. To illustrate we show four simple charts of market “technicals” comparing the Knowledge Leaders to the MSCI World Index constituents.

The first chart shows the median stock’s performance over the last 200 days. The median Knowledge Leader is up 12% over the last 200 days versus only 9% for the median MSCI World Index constituent.

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The second chart shows the percent of issues making new 200 day lows in price. 10% of MSCI World constituents are making new 200 day lows vs only 6% for the Knowledge Leaders.

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The third chart shows the next 12 months sales estimated growth for the median stock in each group. Knowledge Leaders are expected to grow sales by 4% vs only 3% for MSCI World Index constituents.

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Finally, we show the percent of stocks receiving positive sales estimate revisions vs 6 months ago. In essence, we are measuring whether sales estimates higher than they were 6 months ago or not. 57% of Knowledge Leaders have received upgrades to their sales outlook vs only 50% of MSCI World Index constituents.

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