Eli Lilly and Co. (LLY) has gained roughly 63% this year, outperforming the S & P 500 Pharmaceuticals index by over 40%. The strong outperformance from LLY has been associated with strong underperformance by other high-profile stocks within the industry group.
They may be ready to catch up, according to the charts. Bristol-Myers Squibb Co. (BMY) , Johnson & Johnson (JNJ) , and Pfizer Inc.
(PFE) are three examples of pharmaceutical stocks that have been out of favor. All three have cyclical downtrends in place. But, their monthly charts show signs of long-term downside exhaustion.
BMY, JNJ, and PFE have long-term oversold upturns in their monthly stochastic oscillators, and their monthly MACDs show a notable loss of long-term downside momentum. This suggests that their cyclical downtrends have matured, and that their recent strength may be the start of lasting turnarounds. When plotting LLY relative to the lagging pharma stocks, such as PFE, a steep uptrend is in place reflecting outperformance.
However, the monthly MACD histogram on the ratio shows a loss of long-term upside momentum that suggests LLY may be losing its leadership stronghold. In turn, this favors better relative performance from PFE and other laggards in the pharmaceutical space in the coming year. —Katie Stockton with Will Tamplin Access research from Fairlead Strategies for free here .
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