Image Source: Pexels

As the Tech/AI trade has hit a speed bump this month, the Health Care sector has been shot out of a cannon. At yesterday's close, the S&P 500 Health Care sector was 10% above its 50-day moving average and 2.5 standard deviations above its 50-DMA.  Check out the one-year trading range chart of the sector below:

Health Care's move in the last month has left a good chunk of the stocks in the sector at new 52-week highs.  Net new 52-week highs for the sector have exploded to the highest level of the last year:

So far this month, the Health Care sector is outperforming the broad S&P 500 by more than ten percentage points.  As shown below, that hasn't happened since November 2000!

While Health Care is catching a bid these days, it's still deep in the hole based on its action over the last couple of years.  Just over two years ago, Health Care's weighting in the S&P 500 was at 16%.  By this September, its weighting had nearly been cut in half down to just 8.65%; its lowest weighting since August 1994.

Health Care's 18% gain in the last two months has only pushed its weight in the S&P back up to 10% as of today, so there's plenty of runway left for the sector if the good vibes continue.

Below is a look at the most extreme overbought stocks in the sector right now.  Even names like Bristol Myers (BMY) and Johnson & Johnson (JNJ) have joined in on the rally.

Of course, after moves like this, most traders would tell you to wait for some downside mean reversion before jumping in on the long side.

(Click on image to enlarge)

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