Mega-Cap Drug Makers Poised For Breakout --
--Big-cap pharma stocks "starting to look interesting for the first time in
over a decade"
--Pfizer, Bristol-Myers Squibb, Amgen and Abbott labs each showing technical
strength
--Heath-care stocks are leading among defensive sectors so far in 2012
By Chris Dieterich
OF DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--For the first time in years, chart watchers see
positive signs for a handful of big pharmaceutical stocks, signals that
investors might consider the defensive sub-sector for harbor should the recent
rally in U.S. stocks lose steam.
Defensive utilities, consumer staples and health-care sectors have been the
Standard & Poor's 500's top-performing sectors over the last 12 months. Small
wonder, given that stocks have been mired in choppy, macroeconomic driven
concerns
On Tuesday, blue-chip stocks closed at the highest level since July, before
Europe's debt crisis and Standard & Poor's downgrade of U.S. government debt
touched off some of the choppiest stock trading in years. Traders have been
heartened by a brightening U.S. economic picture, but recession fears across
the Atlantic, as well as Europe's ongoing debt crisis, still threaten to derail
stocks' recent run.
But among top-performing defensive sector exchange-traded funds, only health
care is positive so far this year. The Utilities Select Sector SPDR (XLU) ETF
is down 2.8% in 2012, while the Consumer Staples Select SPDR (XLP) is down
1.1%. Meanwhile, the Health Care Select Sector SPDR (XLV), with some of its
largest holdings in Pfizer Inc. (PFE), Amgen Inc. (AMGN), Bristol-Myers Squibb
Co. (BMY) and Abbot Laboratories (ABT), is up 2% this year.
Technicians see in the charts possible signals for continued strength in each
drug maker, which "are in many cases starting to look interesting for the first
time in over a decade," said Chris Verrone, head of technical analysis at
Strategas Research Partners, in a recent note.
Pfizer's stock is showing signs of a positive breakout after a 12-year
downtrend, Verrone said, and remains firmly above its 50-day moving average at
$20.38. Shares fell 0.4% to $21.85 recently.
Bristol-Myers' shares last month broke through a key resistance level near
$30 and are trading near their highest level in nearly a decade. Verrone said
that $30 now is likely to provide support and cushion shares from additional
declines.
Meanwhile, both Amgen and Abbott Labs' shares appear to have broken out of
so-called triangle patterns, signs of positive momentum and that the stocks
could poised to bust through trendlines that capped prices in recent years.
Amgen's shares rose 0.2% to $65.79 recently, while Abbott Labs's shares fell
0.1% to $55.57.
-By Chris Dieterich, Dow Jones Newswires; 212-416-2611;
christopher.dieterich@dowjones.com
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