Bullish Chart Patterns Across Big Pharma

Bull in ring

Everyone’s been focused on the selloff in tech, but something more bullish may be happening in a forgotten corner of the market.

Large pharmaceutical companies including Pfizer (PFE), Merck (MRK) and Amgen (AMGN) have formed triangles in recent weeks. The consolidation comes at a time when money seems to be shifting toward large health-care names.

PFE ripped to new multiyear highs between July and early October. Since then it’s chopped in an increasingly tight range with lower highs and higher lows. That kind of sideways triangle is sometimes viewed as a consolidation pattern before a move.

Pfizer (PFE) chart with potential triangle and 50-day moving average.

This time there could be historical relevance because PFE is challenging old highs from November 2001. Is there potential for a long-term breakout?

MRK is also pushing a levels from early this century. Its price action is more bullish because it’s made higher lows while bucking resistance at $76. Chart watchers may consider that an “ascending triangle” with the potential for continued upside.

Merck (MRK) with ascending triangle and 50-day moving average.

AMGN has a similar pattern, making higher lows as it knocks against $198.

By the way, all three companies reported earnings last month. MRK initially dropped after missing estimates and PFE got some negative commentary from its mediocre revenue. AMGN seemed to have the most positive results.

In conclusion, rotation away from technology has been a key theme in the fourth quarter. But money needs to go somewhere, and these chart patterns suggest some of it could be migrating to big health-care names.

Amgen (AMGN) with ascending triangle.


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David Russell is VP of Market Intelligence at TradeStation Group. Drawing on two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them apprised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.