PeakTrader.com

[arthur]

Big pharma innovators have been under pressure from generic drug competitors, Medicare changes, and lawsuits. There's been a general negative feeling towards high drug prices. However, the pendulum may swing in favor of drug innovators, because of greater awareness that large capital investments are required to create a new drug, and if those investments slow, fewer drugs will be created. However, the debate over excessive profits will continue. Consequently, big pharma innovators may be turning the corner, similar to tobacco firms a few years ago.

The three charts below are two-year weekly charts of BMY PFE and LLY. The large weekly volumes after steep downtrends indicate a bottoming process. Buyers were willing to buy as many shares as sellers were willing to sell at a constant price for over a week, which typically creates a "hard floor." Consequently, when selling slowed, prices rose. Prices may continue to rise, until buyers take some profits. Currently, these stocks are relatively and fundamentally undervalued, and many technical indicators remain severely oversold. So, BMY PFE and LLY may be in uptrends for some time.