Drug Stocks: Uppers, Downers and a Positive Reversal
- Posted by Greg Harmon
- on February 13th, 2012
The household name drug companies have taken it on the chin the last week or two falling 4 to 5%. Well, they bounced today and in a very good way technically. Look at the charts of Amgen, $AMGN, Celgene, $CELG and Pfizer, $PFE with me to see why.
Amgen, $AMGN, has had a strong chart flying higher since November but after building a bull flag it ran through a period where it lost 5% over less than 2 week and had its Relative Strength Index (RSI) fall sharply from an overbought situation. Look at that last 3 months zoomed in below. Seven trading days took it lower. But the turn today shows signs of promise. The small body candle Friday at the bottom followed by the longer white candle Monday with the RSI turning back higher
and holding in bullish territory is what makes it interesting to the upside. It has another shot at 70, a 2.6% move if it happens and likely in just a little time. Not too shabby. The same situation is going on in Celgene, $CELG. It is only 2.5% back to the top of its range, but notice the similarity to Amgen. Technically it is an even better entry. The RSI made a new lower low while the price did not.
This is a 10 day RSI Positive Reversal and has a target of 75.39 or 3% higher. But more importantly re-enforcing the candles. Pfizer, $PFE, has the same look to it but is stretched out over a longer period. This allows you to see that the Moving Average Convergence Divergence (MACD) indicator is also improving towards a positive cross to re-enforce the whole pattern. At 21.30 it has 3% upside before reaching the top from January 17th. Another kicker here is the 4.20% dividend yield.
None of these moves will make you rich unless traded in size. But did you notice that they all are moving higher with a market that is moving higher? Defensive names and the broad market all gong at once. Maybe that is the really big news.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Fixing a trade in W.W. Grainger
- Update on the Nested Head and Shoulders in the SOX
- The Harmonics in Honeywell
- Premium Earnings 9-29-14
- Top Trade Ideas for the Week of September 29, 2014: Bonus Idea
- Top Trade Ideas for the Week of September 29, 2014: The Rest
- Top Trade Ideas for the Week of September 29, 2014: The Rest Premium
- Top Trade Ideas for the Week of September 29, 2014: The Best
- SPY Trends and Influencers September 27, 2014
- Macro Week in Review/Preview September 26, 2014