ABBOTT LABS AND SCHERING PLOUGH ALSO HIT 52-WEEK HIGHS IN STRONG DRUG GROUP --- BRISTOL MYERS SQUIBB BREAKS OUT OF BASE
MORE DRUG LEADERS ... In my earlier market message, I showed today's explosive upmove in the pharmaceutical group -- spearheaded by Johnson & Johnson. I mentioned, however, these next two stocks who also qualify as drug leaders. The weekly bars in Chart 1 show Abbott Labs trading over 45 for the first time since mid-2002. Its RS line, which has been trending lower for two years, has just turned up. The same is true for Schering Plough in Chart 2. That drug leader is just now breaking through major resistance at 20. That's looks like the start of an important uptrend. Not only are pharmaceutical stocks just starting to break through long-term resistance barriers, their relative strength lines also show that their upside leadership is very recent. That means that the stocks are historically cheap, provide good value, and have good upside potential. The volume bars on the weekly charts don't look that impressive. Don't let that fool you. Take a look at the daily charts to see how impressive today's upside volume was.

Chart 1

Chart 2
BIG VOLUME BREAKOUTS ... The daily bars in Charts 3 and 4 show the same two drug leaders -- ABT and SGP -- but with today's volume bars more prominently shown. The big volume bars speak for themselves. And they're bullish. The December jump in their RS lines can also be seen more clearly on the daily charts.

Chart 3

Chart 4
DON'T FORGET BMY ... Bristol Myers Squibb isn't trading at a 52-week high. In fact, it's trading closer to its 2004 low. But it is trending higher. Its daily chart shows the stock having broken through its 200-day moving average this week and trading at a new six-month high. Its last two volume bars are also pretty impressive. Its RS line is also starting to jump for the first time in a while. In my view, these are among the best looking charts I've seen in awhile. I suggested yesterday that I felt that consumer staples and healthcare stocks provided a relatively low-risk way to participate in a maturing bull market entering the new year. After today's strong drug action, and after reviewing their impressive chart patterns, I feel even stronger about that view. While other uptrends have been in place for awhile, the pharmaceutical uptrends are just beginning.

Chart 5