Trading Places with Tom Bowley

This Pharma Stands Above (Most Of) The Crowd


Pharmaceuticals ($DJUSPR) have definitely been an area to avoid in 2019, which is somewhat surprising when you consider how effective many defensive areas have been this year. Still, with the S&P 500 up roughly 18% year-to-date, the DJUSPR has actually fallen 2 points from 553 to 551, clearly posting below average results. But not all pharmas have underperformed that badly. Merck & Co (MRK), a Dow component, is actually higher by 12% in 2019 and yields a nice 2.65% dividend. The other pharma component in the Dow Jones - Pfizer (PFE) - is down nearly 16% year-to-date by comparison and ranks higher than only one other Dow component, Walgreens Boots Alliance (WBA).

MRK, however, has been in a steady uptrend and continues to look solid in my view:

The blue arrows mark the higher highs, while the red arrows mark the higher lows. That's the definition of an uptrend - higher highs and higher lows. The relative strength in MRK is apparent as well, despite a group that's been very weak. Currently, MRK resides in a rectangular consolidation pattern with equal highs and equal lows, but this comes on the heels of an uptrend, so we should expect a breakout to the upside.

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Happy trading!


Tom Bowley
About the author: co-founded Invested Central in 2004 and served as the site's Chief Market Strategist for more than 10 years. Invested Central provides stock market education and guidance for those interested in making their own financial decisions. During his tenure at Invested Central, Tom co-hosted Market Open LIVE, a national radio broadcast that covered many of the largest markets across the U.S. In addition, he has spoken at various conferences throughout the United States and Canada and has taught thousands of traders across the globe how to trade equities more wisely with an emphasis on managing risk and intermarket relationships. Learn More
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