Pfizer (PFE) is attracting attention this morning in the wake of announcing it will hike the price on a number of its drugs in January 2019. Market watchers and analysts are waiting for a tweet from President Trump to try to embarrass or strong arm management into rescinding the raises.
I prefer to look at the price action and volume patterns to see if PFE is still attractive from the long side. Let's check our indicators.
In this daily bar chart of PFE, below, we can see that prices made a sideways consolidation pattern from last November to early July. From July to early October prices rallied before a correction unfolded. PFE is currently just below the rising 50-day moving average line. The rising 200-day moving average line intersects just below $39.
The rising On-Balance-Volume (OBV) is positive until early October and then it turns neutral/positive. Prices dip in October/November but the OBV line has been steady/flat telling me that buyers and sellers of PFE have been balanced.
The trend-following Moving Average Convergence Divergence (MACD) oscillator peaked in August and made a lower high in October when prices peaked at a higher high. The MACD oscillator is now on the zero line signaling no trend strength as it is poised for a new buy or sell signal depending on the price action in the days ahead.
In this weekly bar chart of PFE, below, we can see that PFE has rallied over the past three years. Prices are above the rising 40-week moving average line.
The weekly OBV line shows an increase from early 2016 and suggests that investors have been buying PFE aggressively for a long time.
The weekly MACD oscillator has crossed to the downside to signal a take profits sell signal.
In this Point and Figure chart of PFE, below, we can see an upside price target of $48.95. A trade at $45.73 will be a double top breakout while a decline to $40.99 will be bearish.
Bottom line strategy: I think the broad market is close to a bottom and the start of a year-end rally so I am trying to look at PFE will a bullish bias. Traders and investors should look beyond today's news stories and probe the long side of PFE at current levels and on strength. Risk a close below $41.50 and look for gains to the $49 area in the next few weeks/months.
