December 28th, 2011

Big Pharma: Industry Group with Upside Potential

While market direction and momentum trumps everything else, the Industry Group in which a stock belongs ranks second in importance.  A subscriber to Instant Alerts last week brought to my attention a stock that, on further research is in an Industry Group that is worthy of taking a nibble into if the market will be able to sustain some sort of upward bias as we enter the New Year.

“Big Pharma” stocks, or the larger stocks in the Ethical Drug Industry Group, all seem to be forming nice size, well formed (so far) bases which could, with a good tailwind, be among the leaders in next year’s market.  The Group has consistently ranked among highest among IBD’s 197 Industry Groups: Among the largest firms in the group whose charts show the early makings of nice bottom reversal patterns (a few have already broken above the top boundaries) include (click on images to enlarge):

  • BMY (Bristol Myers): crossed above a nearly 10-year long resistance trendline
  • LLY (Eli Lilly): crossed above upper boundary of an ascending triangle but is now facing a nearly 10-year descending resistance trendline which it failed to cross over in 2007 and may fail again next year.
  • GSK (GlaxoSmithKline): Let’s not split hairs. Was it an ascending or symmetrical triangle or was it an ascending wedge? It doesn’t really matter that much since stock is clearly trudging higher.
  • PFE (Pfizer): Same as GSK, ascending triangle or wedge? Same as LLY, facing a long descending resistance trendline.
  • NVS (Novartis): An nice inverted head-and-shoulders which, since it’s not at the bottom of a trend but at the top might be called, in IBD parlance, a cup-and-handle.

Others with patterns that are not as fully developed and still in progress include:

  • SNY (Sanofi-Aventis): an ascending triangle
  • AZN (AstraZenica): a 10-year horizontal trendline that needs to be crossed.

A lot to digest but, with a more cooperative market, some potentially good fruit to pick from.  Note: all of these stocks pay dividend with yields currently 3.6% up to 4.8% for GSK.  They are about the only stocks among the 45+ in the group that do pay dividends.

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December 7th, 2011

New Highs + Dividends; Unbeatable In This Market?

I know it’s frustrating having to sit around waiting for the market to show its hand as to future direction.  But for me, it’s the cautious and prudent thing to do.  I’ve just been disappointed and have lost too much in the past by thinking I can pick the few stocks that are able to hold their own against the forces of a declining market.  But I am beginning to put together a watchlist of stocks with interesting technicals but have decided not acting on them yet.

One place I began my search is to comb through stocks that are in all-time new high territory (because of system limitations, I’m limited to stocks moving to new 5-year highs as a surrogate metric).  A measure of how poorly stocks have performed over the past 18 months is the fact that only 118, or 2.4% of all stocks, meet the criteria. The distribution of these 118 stocks by Industry Group includes:

Stocks in All-time New High Territory by Industry Group 12/07/11

Not knowing how long it will be before the market gained some upward momentum, I decided to zero in first on the stocks paying the largest dividends.  For those itching to hit that “Buy” button, here are a few stocks I came up with you might be interested in:

Top Dividend Payers + All-Time New Highs 12/07/11

Dividends and continuing their ascent into all-time new high territory.  Almost an unbeatable combination?