Newmont Mining (NEM)

Newmont mining is a gold stock and the gold stocks on many occasions lead the gold futures and spot price higher or lower.  Newmont closed at 61.68 up a dime on the day.  Price gapped open and then spent the rest of the day tracking downward to try to close that opening gap.  Price has gone through the entry price for the next leg higher with the first price objective at 67.83.  There is upside pressure being applied to price on the daily chart, but the lower timeframes have downside pressure being applied.  I would be careful entering here as there is currently divergence at the highs which indicates that price might try to close the upside gap.  In order to start a move down price would have to go through 59.97 and then the first price objective would be 56.55.  These levels  are not shown on the chart. 

Some Fundamentals on the Drug Stocks

I don’t have the valuation model for LLY, but I thought that it might be interesting for you to see the value models for the other drug stocks I posted on earlier this week-end.  There could be various reasons that the drug stocks are acting a little better than some of the other stocks.  the health care debates have affected their overall performance, but valuation and dividend yield might be another factor  in their individual performance.  A look at the X dividend dates might also offer some insight as to price action.

Valuation models courtesy of  www.powerinvestor.com

The S&P 500 Index (SPX) 02-13-10

The SPX closed Friday at 1075.51 down on the day.  There is still upside pressure being applied to price, but price can’t seem to get a foothold to move higher.  It has gone through the entry price for the move up that has its first price objective at 1105.90.  Price found support at the first price objective for the move down at 1046.  The lower time frame charts have price objectives and targets in the 1085 area with the highest target at 1094.  All below the 1105 level.  All three time frames that I looked have upside pressure being applied to price so if you are short right here be careful.  It doesn’t seem that price wants to move much higher, but time and some announcement will tell.

 

Drug Stocks 2-13-10

Well Point (WLP) announced that it was going to raise fees in California by 39%.  This created an outrage in California as well as in various governmental agencies.  This might be the catalyst that gets a health care bill through congress.  It might not be the weighty bill that is now there with its 3900 pages of rules, regulations, perks and pork.  It is up in the air as to whether other health insurers will follow WLP after the furor abates.   A look at the drug stocks may give a hint as to what is in store for us.  They rallied on the news that the current bill was stalled and it looked like it would not pass.  Now there is a question whether some type of bill will pass as a first stage to a complete health care package.

The S&P Pharma Spyder (XPH) closed up on Friday at 38.59.  It has been rising for the past 5 days and yet hasn’t been able to take out the previous high.  There has been upside pressure the entire move so there has to be some substantial longer term pressure keeping price from moving with a greater range.  The pressure indicator is still up and entering the over extended area of the chart.  Price reached the target price for the short cycle move down but did reach the first price objective for the longer cycle move at 36.60.  For price to start a move higher it would have to go through 38.87 and then the first price objective would be 40.57 Noted with the green lines.  The longer term price objective at 40.17 could act as resistance before reaching the 40.57 level.  For price to restart its move down price would have to go through 37.80 and then the first price objective would be 37.00.  These were not shown on the chart for reasons of clarity.

Abbott Labs closed Friday at 53.93 up on the day.  There were two factors that halted the upward movement of ABT.  The first is that it hit the second price objective for the move higher and the second was that it also hit the top of the channel.  Price found support at the first price objective for the small cycle move down at 52.87.  There is currently upside pressure being applied to price. For price to restart a move higher it would have to go through 56.21 based upon the current low.

Eli Lilly closed down on the day yet at the top of its daily range.  There is currently downside pressure being applied to price and the indicator is in the over extended area of the chart.  Price found temporary support just above the first price objective of 33.39.   For Price to restart and up it would ahve to go through 35.04 and then the first price objective for the move up would be 36.44.  There was a slight gap down on Friday that might get closed on Tuesday.

Pfizer (PFE) Closed down on the day.  Price is currently trapped between the second price objective for the move down and the target price for the move at 17.48. It has also broken through the lower channel line.  The is upside pressure being applied to price and there is divergence at the low.  The lows have been marching along target price for an intraday chart.  There are shorter cycles that project price to 17.96 and then 18.04.  For a major move higher to occur price would have to go through 18.67 and then the first price objective would be 19.74. 

Merck (MRK) closed up slightly on Friday at 36.92.  Price found support at the target for the short cycle move down.   Price remains in the up channel which is not shown on this chart.  There is upside pressure being applied to price and there is divergence at the low.  Price would have to go through 38.57 before a move of any substance could occur.  Then the first price objective would be 41.38. 

All the drug stocks that I follow have found support.  They all have upside pressure being applied with the exception of LLY.  The drug stocks should rally, but from the range of current price moves higher it doesn’t seem that this rally will go very far.