Return of Pharma and Oil Boils

Published: Wed, 04/08/20

The Truth About The Markets

Dear ,

After the FED fired we are seeing some signs of relief short term in the dollar and commodities. Oil is bouncing and the Producers are talking. But we still need to watch out if these trends are corrections to the larger trend or there is a real change long term

In the meantime as you search for a defense, one sector that appears to stand out recently is Pharma. Only last week I wrote about the Healthcare index hitting the bottom end of the long term channel as seen below. I covered a handful of stocks. But this morning I notice that the real out performance came not from Indian pharma stocks that were in a 4 year bear market but from MNC pharma stocks some of which have not even budged in the recent market massacre. Below you see the Insiders post on Pfizer. So more than FMCG that is considered the usual line of defense the Healthcare industry that is in the eye of the storm might be in a better position. Does that make for a pair trade? Like long pharma short fmcg. Worth a thought.

These are unusual times and more than ever take care of yourself and use the time on hand wisely to rethink your long term strategies.

Rohit

Bank of America

This is a big American bank so makes for interesting analysis. Especially since these stocks took a big hit in the housing collapse and were all bailed out. The result is that it hit a low of 2.5 and went up to 35. A more than 10 bagger without making a new all time high. When I look at long term yearly and quarterly charts for the big picture wave counts this is what I see. A 5 wave decline in 2008-2009 was wave A and we completed an A-B-C from that bottom to the recent top, in wave B. Then wave C down started and we have just completed wave 1 of C down in a new bear market. This should see wave C down go back below 2.5 dollars before it is complete. That is that. Crazy impossible but that is the chart as of now.

boa 070420

Pfizer

When looking at Pharma stocks I find that the deep correction was in Indian pharma stocks but MNC pharma has continued to hold out against the crash and in many cases is near the highs. Pfizer is one such example. The long term channel shows that the stock spent a lot of time at the lower end of the channel and the top end is now as far as 13000. I have marked only parts of the wave counts as 1-2-3-4 where waves 1 and 4 are not overlapping so that gives us some idea.

pfizer080420

BSE Metals index

The Metals Index mostly completed wave 3 down and is ready to bounce back more in wave 4. Wave 3 ended with an ending diagonal. The daily momentum is turning with multiple positive divergences. The BSE Metals index could go back to near 7000 [current 5587], near the start of the wedge and the 40dema and a 38.2% retracement.

metals 020420

BSE Healthcare

The BSE Healthcare index is at the lower end of the falling channel which could be wave Y of the downtrend. A bottom or an X wave to the top end of the channel could follow medium term.

pharma 020420

Crude

Crude was down but a-b-c up is not complete so one more bump up should be on the cards before we can head lower.

crude 080420

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Rohit Srivastava
www.indiacharts.com
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