Healthcare/Pharma Activity

In mid June of this year, we pointed out some activity that appeared interesting from the longer term chart patterns of some healthcare/pharma stocks.  One of the stellar performers since then has been Abbvie (ABBV), a pharma company which produces Humira, a top selling anti inflammatory treatment among other high profile drug therapies.  After breaking away from its resistance area in the 65 area, ABBV has proceeded to run up sharply over the past few months.

After approaching 90 in the past week, the stock is up almost 40% since June.  The last daily bar shows that a threshold of some kind has been reached and accordingly we expect an abatement in the advance.  Since prices are substantially above the indicated moving averages there is lots of room for back and fill.  A trading stop just below 85 is advisable for swing traders.  We note that the momentum statistics still show continued strength.

Another issue discussed at the time was a very aggressive ETF, LABU, which is a 3X multiple instrument.  These kinds of issues are VERY speculative but can significantly increase a return in a given sector over a short period of time if assumptions are correct.  The strength here indicates the accumulation going on in the biotech sector and we can drill down to look at other individual issues.

We observe that this issue has advanced from the presumed breakout at the 61 area in June to the present level at 71.  The issue still looks very attractive as it is just breaking away from the long term base. For aggressive traders only.

Finally, the most conservative issue mentioned was Eli Lilly (LLY).  The chart pattern has been coiling in a large consolidating range and we fully expect that it will soon break away from this range to the upside.

We note that the accumulation statistic is middling at the moment and the aroon indicator has yet to flash bullish.  Upon a break to a new high, I expect an advance to target 110.  A move back down to the 79 area may provide a good entry.

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