I Want a New Drug

In my earlier post on Finding Stocks the Ferengi Way one of the first industry groups I highlighted was the Major Drug companies. Here is a look at a few that have tickled my lobes.

Johnson and Johnson JNJ

I’ve set JNJ up as short-term swing trade but it can certainly be traded as trend trade as well. Here we see a classic flag break out. According the Encyclopedia of Price Patterns, flags have a probability of success around 70% correct in meeting the price target. The price target is the equivalent move of the flag pole as I have designated. I would exit at the target or a cross below the 8 day moving average whichever comes first.

Merck MRK

MRK is giving us a classic Ascending Triangle pattern. Here we see a good break on strong volume. The base of the triangle will once again give us a price target. I would look at exiting at $63 or a break below the 8 day moving average, whichever comes first.

Pfizer PFE

Pfizer I am showing as a much different trade then those above. This one is much longer in nature. The long-term chart is showing us support bounce along with a recent channel break.

The shorter-term chart is confirming out long tern outlook. We see a bullish divergence on the MACD as it creates higher lows. The Stochastic oscillator is giving us a triangle pattern and a break of resistance would be a great confirmation. Since I am bottom fishing here on this stock I am going to go in with a very small position. You can see two more resistance lines where if I see breaks take place I will continue to scale in. Currently I have my stop set at $23.25 but once the stock breaks the next resistance line I would begin to use 3% below the 30-day moving average.