The major indices continue to see extreme selling pressure. Breadth is running about 1,750 gainers to 5,350 decliners and new 12-month lows are over 300. There is a steady diet of bad news and no immediate technical support until the lows of October are retested. Market leader ( AAPL) is now leading stocks down rather than up.
In the midst of this ugly action there is one sector that is performing well. Pharmaceuticals are viewed as a safe haven because demand for drugs is typically unaffected by the economy. In addition, the group is well known as a safe haven and that makes it self-fulfilling to some extent.
Key names in the group are Pfizer ( PFE) , Johnson & Johnson ( JNJ) , Lilly ( LLY) and Abbott ( ABT) .
Pfizer trades with a trailing PE of 15 and is expected to grow earnings 2% in 2019. In its most recent quarter it saw EPS growth of 16% and revenue growth of 1%
Of this four names, Lilly has had the best growth with an EPS increase of 32% in its most recent quarter and revenue growth of 7%. Lilly also has the best looking chart in the group as it tests resistance at the $115 level and is on the verge of a new closing high.
Pfizer has not had the same relative strength, but it is in the middle of a trading range and needs to move over $44.50 to gain momentum to put the recent highs into play.
Both Abbott and Johnson & Johnson also have better looking charts than Pfizer as they are hitting highs and seeing superior relative strength.
Pharmaceuticals are the group you want to be in when the market struggles. Any of these four will likely do well if the market pressure continues.
