PHARMACEUTIALS LEAD HEALTH CARE SPDR TO POSSIBLE UPSIDE BREAKOUT -- DRUG LEADERS ARE ABBOTT LABS, MERCK, AND PFIZER -- MEDICAL EQUIPMENT STOCKS ALSO LOOK STRONG -- THAT INCLUDES BOSTON SCIENTIFIC, MEDTRONIC, AND THERMO FISHER SCIENTIFIC
HEALTHCARE SPDR MAY BE TURNING UP ... The health care sector may be nearing an upside breakout. The daily bars in Chart 1 shows the Health Care SPDR (XLV) trading above its 200-day average in today's trading; and testing its late May intra-day peak at 90.18. A close above that resistance level (and its red line) would constitute a short-term upside breakout for the XLV. Defensive money has been flowing into the sector since mid-April. The gray histogram bars plot a ratio of the XLV divided by the S&P 500. The relative strength ratio is trading at the highest level in nearly two months. Medical equipment stocks have had a strong week. Today's rebound, however, is being led by pharmaceuticals. Chart 2 shows the Pharmceutical Index ($DRG) moving above both moving average lines and nearing a test of its May highs. Some individual drug stocks are also having a good chart day.
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Chart 1
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Chart 2
ABBOT LABS, MERCK, AND PFIZER LEAD DRUG RALLY ... Three of the individual drug leaders are shown below. Chart 3 shows Abbott Labs (ABT) jumping sharply this week, and nearing a possible new record. Chart 4 shows Merck (MRK) climbing to a new two-month high. MRK is also trading above both moving average lines. Chart 5 shows Pfizer (PFE) trading above its early April intra-day peak at 42.90. A close above that level would reverse the negative pattern of lower peaks and troughs that's been in effect since early December. PFE has also risen above its 50- and 200-day moving averages. Those are healthy looking chart patterns.
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Chart 3
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Chart 4
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Chart 5
MEDICAL EQUIPMENT LEADERS ... Medical equipment stocks are also showing stronger chart patterns. Chart 6 shows Boston Scientific (BSX) climbing to the highest level since early March, and nearing a test of its spring high. Chart 7 shows Medtronic (MDT) rising to the highest level in six months. The stock recently broke through its spring high near 94 to achieve a bullish breakout. Chart 8 shows Thermo Fisher Scientific (TMO) in a triangular formation that's been forming for nearly two months. That's normally a bullish pattern. And increases the odds for a new record.
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Chart 6
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Chart 7
