[Premium] The Pharma Stocks We're Buying

First let's start with the stocks in the sector that we want to be avoiding. Names like Aurobindo Pharma come to mind as it's stuck below a ton of overhead supply and momentum is in a bearish range. There may be mean reversion potential here, but it's not a clean setup and we'd prefer to be involved with trending stocks making new highs.

Click on chart to enlarge view.

If you have to be a bottom fisher then Sun Pharma above 430 has the potential to head back up towards 535. With that said, it's been chopping around this level so we think the setups that follow are cleaner and offer a more attractive reward/risk.

Here's AstraZeneca Pharma India breaking out of a massive base to new highs. As long as prices are above 2,400 on a weekly closing basis, the bias is higher towards 3,500.

Pfizer looks very similar from a risk management perspective. As long as prices are above their former highers/price objective at 3,770 then we want to be long with a target above 5,800.

Divi's Labs has yet to gain any upside momentum, but as long as prices are above 1,700 then we can own it with a targe tup towards 2,640. It's consolidated well during Pharma's weakness, so if the sector catches a bid then we'd expect it to resolve higher.

IPCA Labs was a great trade for us so far. Nothing to do at current levels, but once our price target of 1,215 is met then we can reevaluate as our secondary price target is up above 1,700.

Wouldn't be surprised to see Sanofi India Ltd. retest 6,500 again before heading higher, but if it's above that level then this breakout is intact and targets 8,220.

Suven Life Sciences isn't ready to go just yet, but if prices can get above 340 then we want to be long with a target near 460.

J.B. Chemicals & Pharmaceuticals could use some time too, but when prices get above 405 on a closing basis we want to be long with a 505 target.

If our thesis plays out and Pharmaceutical stocks outperform in the months and quarters ahead, these stocks will likely be leading the charge.

If we're wrong then we have well-defined risk and can reevaluate if/when we get stopped out.

Thanks for reading and please let us know if you have any questions.

Allstarcharts Team