DEFENSIVE MONEY IS MOVING TO DRUGS

PHARMA HOLDERS ARE UP... Pharmaceutcial stocks are rallying today in the face of a weak stock market. Among sector ETFs, the AMEX Pharm Holders are in the top spot. The daily bars in Chart 1 show the PPH breaking through its 50-day average on rising volume. Its relative strength line is also jumping versus the S&P 500. The jump in drug stocks started a few weeks back when interest rates starting rising. That may be a sign that stock money is moving into more defensive groups -- like the drugs.

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PFIZER, JNJ, MERCK AND LILLY LEAD DRUG ADVANCE... It's not hard to see where the Pharma rally is coming from. The biggest holdings in the Pharma Holders ETF are Pfizer (26%), Johnson & Johnson (17%), Merck (12%), and Lilly (9%). All four are rising above their 50-day moving averges today. The top three gainers in the Dow Industrials are drug stocks and accounts for the Dow's relative strength today. Weakness in semiconductors (and Intel in particular) is weighing on the Nasdaq. Oil service stocks are leading the Energy sector higher.

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