GUEST COMMENTARY - JOE DUARTE

John Murphy
by John Murphy,
Chief Technical Analyst, StockCharts.com

JOHN WILL BE BACK TOMORROW... John's finishing up his vacation today and will be back tomorrow with an indepth weekly summary article. In the mean time, here's one of our most popular guest commentators, Dr. Joe Duarte, and his Stock of the Day.

STOCK OF THE DAY... Any significant rally in stocks is best exploited on the long side by sector specificity and stock selection. Today's charts highlight the brokerage and large pharmaceutical sectors, providing an interesting contrast.

Lehman Brothers (NYSE:LEH), broke out to new highs on 5-28, suggesting that the current stock rally still has momentum. A market with a strong trend in the brokerage stocks is rarely in a long term bearish trend.

But, if you are a health care investor, European diabetes product kingpin Novo Nordisk (NYSE:NVO) is clearly not the place to be long. The stock has broken down and looks to be heading lower.

The message is clear. Money is starting to rotate out of large pharmaceutical stocks. Of late health care money has been flowing into biotech.

A failure by Lehman Brothers would be a subtle but important sign that a pause in this rally is imminent.

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John Murphy
About The Author:

John is a renowned author in the investment field and former technical analyst for CNBC. Considered the father of intermarket technical analysis, his books include “Technical Analysis of the Financial Markets” and “Trading with Intermarket Analysis”. Learn More 

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