The DOJ killed AGN & PFE, right? Well, both are actually up today, but I want to look at the other major drug companies. Look at these charts of Pfizer (PFE), Merck (MRK) and Eli Lilly (LLY). (April 06, 2016)
LLY PFE MRK
In this Chart video I’m not just going to look at one stock, I’m going to look at three; they’re the big dog drug manufacturers.
We’re going to start with Eli Lilly ( NYSE:LLY ). The biotech sector really took off today, actually for a number of different reasons. I think it’s like the easiest story is the most popular one. The government is blowing up the Pfizer ( NYSE:PFE ) Allergan ( NYSE:AGN ) deal. In other words, I don’t want to pay any taxes so lets go over to Ireland type of transaction. And so that really kind of put everything else in play; like, “Oh, such and such a company might be acquired,” and this and that. But I just thought in this video I wanted to just look at the major large cap drug companies.
If you look at the weekly chart here on Eli Lilly ( NYSE:LLY ), this looks like a nice up escalator that’s now turned into a down escalator on the weekly chart. But this move back above the 50-day moving average has some legs, so this could move for a while. You really need to see it breaking 76.00, but this level of 70.00 should hold. If you’re long this stock and the stock starts trading down below 70.00, that should kind of be your exit signal, but I think it works.
Okay, Pfizer ( NYSE:PFE ), duh. You see why this went up, they don’t get to merge with Allergan ( NYSE:AGN ). I guess investors really like that, huh? So THIS works. It’s way extended, there’s no way that I could buy this stock as I look at it here. If I’m looking at a 5-minute chart then when this stock opens up tomorrow, if it starts trading above 33.00, THAT’S when I’ll buy it and I’ll probably zoom all the way out to the 15-minute chart, I mean that would be it. This stock is just up quite a bit. It’s up a lot and it’s still technically, if the stock peaked here, it’s still technically printing lower highs.
But from a pure momentum standpoint this stock could have a little more in it. But here’s my suggestion, the stop stays tight, tight, tight, tight all the way up. And then when the stock reverses, it reverses and you’re out. On Pfizer ( NYSE:PFE ), if you are long this stock, in three days, the way this chart looks, it looks like you should have doubled your money. But actually you’re up 7 percent or so in three days. I would suggest keeping a running stop behind it, because this kind of move on a stock like Pfizer ( NYSE:PFE ), it will probably retrace at some point. So don’t just sit there and holdout for $100.00.
Okay, Merck ( NYSE:MRK ), it’s rising in sympathy with the others. This is a nice clean break above the 200-day moving average. I think this stock works. You can see a nice kind of a ‘W’ pattern here, it’s just moving above this top right there. This is the kind of thing that you like to see. Back above the 200-day moving average; keep a trailing stop on this as well.
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