Pfizer Inc. (PFE) have rallied in the past two weeks leading up to the big drugmaker's third-quarter earnings release on Tuesday. Let's review the charts and indicators to see if this rally has further strength or is vulnerable to renewed declines.
In this daily bar chart of PFE, below, we can see a downward trend from December. Prices worked lower to an October low and have bounced the past two weeks. PFE has rallied above the bottoming 50-day moving average line but is still below the declining 200-day line. The On-Balance-Volume (OBV) line has mostly been weak since December but there is the start of some improvement in early October. The trend-following Moving Average Convergence Divergence (MACD) oscillator has crossed to the upside for a cover shorts buy signal. Further gain in the oscillator will generate an outright buy signal.
In this weekly Japanese candlestick chart of PFE, below, we can see the past three years of price action. We can see the same decline as the daily chart above. Prices show us a bottom reversal pattern on the candles but we are still below the declining 40-week moving average line. The OBV line shows a bearish decline and the beginning of improvement in October. The MACD oscillator is close to a crossover and cover shorts buy signal.
In this daily Point and Figure chart of PFE, below, we can see a potential upside price target in the $57 area.
In this second Point and Figure chart of PFE, below, we see a price target in the $39-$38 area.
Bottom line strategy: These four charts and indicators of PFE give me a mixed review. With the broad market averages rallying this month the improvement in the charts of PFE could be more short covering than new outright buying. I don't have any knowledge of what PFE will be telling shareholders Tuesday so I would stand aside at this point in time.
