CHARTS OF STRONGEST DRUG STOCKS -- PFIZER ISN'T ONE OF THEM -- JOHNSON & JOHNSON IS -- SO IS ABT AND BMY

FIRST PFIZER ... Because of its large size, Pfizer carries a lot of weight in the drug and healthcare groups. That's why its price jump today is helping to spark buying in both groups. But, in my opinion, it's not one of the more attractive drug stocks from a charting standpoint. The daily bars in Chart 1 show PFE gapping higher today and moving closer to its 2005 high. It's still way below its 200-day average, however. The monthly bars in Chart 2 also show why it's hard to get too enthusiastic about the stock. After falling to a multi-year low, Pfizer has layers of overhead resistance to get through. In addition, its recent bottom doesn't appear big enough (time-wise) to support a major price advance. There are better alternatives in the drug group.

Chart 1

Chart 2

JOHNSON & JOHNSON HITS RECORD HIGH ... Back in mid-December, I wrote an article on the revival of the drug and healthcare groups December 16, 2004. That story highlighted Johnson & Johnson as the star of the drug group as it hit a new 52-week high. That's still the case. The daily bars in Chart 3 show JNJ hitting a new 52-week high today. It's relative strength line has been rising strongly since December. The monthly bars in Chart 4 show that JNJ recently broke through its 2002 high at 65 and is trading at a new record. Its monthly relative strength line has been rising for the last year. JNJ is still the star of the drug group.

Chart 3

Chart 4

ABBOTT LABS AND BRISTOL MYERS SQUIBB ARE LEADERS... A second story published on December 16 identified Abbott Labs and Bristol Myers Squibb as potential drug leaders December 16, 2004. Abbott had just hit a new 52-week high while Bristol had just broken out of a chart base at 24. Both stocks have remained leaders in the drug group. [Schering Plough, which was shown on December 16 hitting a 52-week high, hasn't fared as well]. Chart 5 shows ABT moving over 47 and on its way to challenge its January 2005 high. Its relative strength line is also close a new yearly high. It certainly ranks as a drug leader. Chart 6 shows BMY close to a new 52-week high as well. Its relative strength line recently broke out to a ten-month high. If you're looking to buy a drug stock, I'd choose from among these three. Another alternative is to buy either of the two ETFs discussed earlier today -- the Pharma Holders (PPH) or the Healthcare SPDR (XLV). Either ETF gives you broader exposure than you'll get with an individual stock.

Chart 5

Chart 6