Viagra, Plavix & Correctol: Your Portfolio Needs all Three

• Posted by Greg Harmon
• on December 19th, 2011

Large Cap Drug Companies are leading the charge higher. Those boring stocks your parents or grandparents own right? Never mind what that means for the market’s perception of the strength of the economy (Defensive), at over $50 billion market capitalization why are they leaders? Well they have good dividends at 4% or more, but their charts are also strong attracting technical buying. So even if you do not have these drugs in your medicine cabinet you can still benefit from these companies. Let’s take a look at three.

Bristol Myers Squibb, $BMY

Bristol Myers Squibb, $BMY, maker of Plavix, has been rising off of a low at 30 in late November but showing a bit of topping action. Actually that is to be expected as the chart shows it has reached the Median Line of the Andrew’s Pitchfork. Otherwise it has a Relative Strength Index (RSI) that is bullish and rising with a Moving Average Convergence Divergence (MACD) indicator is positive, both supporting more upside. All of the Simple Moving Averages (SMA) are sloping higher supporting the uptrend continuation as well. Finally measuring an AB = CD pattern from the August lows to the October highs gives a Measured Move (MM) to 37.50.

Merck, $MRK

Merck, $MRK, maker of Correctol, has also risen from the depths of August and is now making multi-year highs near the previous highs at 36.50. It shows a few Topping Tails which may signal some consolidation or a pullback before continuing on to the Fibonacci retracement at 38.40, of the move from 2008 down through to the 2009 lows. The RSI is strong and bullish while the MACD is positive and increasing, both supporting more upside.

Pfizer, $PFE

Pfizer, $PFE, maker of Viagra, is consolidating, showing Topping Tails, as it breaks above the June highs at 21.00. The RSI is bullish and strong in this name as well and the MACD is positive, although may be stalling. These will support consolidation or a move higher. Another indication that it may pause is that it has reached the Measured Move target at 21.25. But still a strong chart, and remember it is paying you 3.8% to wait.

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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.

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