Don't Ignore This Chart!

Pfizer Bounces within Uptrend


The pickings are slim as the market corrects and may charts turn ugly. I am noticing some strength in big pharma with Merck (MRK) up in March and Pfizer (PFE) holding above the early February low (so far). 

The chart shows PFE with a zigzag uptrend since June. The stock surged to a new high in late January and then plunged back to the October low in early February. Price action remains a volatile as the stock bounces in this range. 

I still consider the trend up because the 50-day EMA is above the 200-day EMA, the stock hit a new high two months ago and the 200-day EMA is holding (for now at least). There is also considerable support in the 33.3-34 area. 

PFE became oversold as RSI dipped below 30 for the second time this year and moved back above 30 with this week's bounce. Thus, a mean-reversion setup is in play and the long-term trend is still up. 

The indicator window shows the price relative (PFE:SPY ratio) edging higher since late January. This means PFE is outperforming SPY since late January. This is not because of strength, but rather because PFE is down less than SPY since January 23rd. 

Plan Your Trade and Trade Your Plan.

- Arthur Hill, CMT

Senior Technical Analyst,

Book: Define the Trend and Trade the Trend
Twitter: Follow @ArthurHill

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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