With the US indices looking ever more fragile, it’s no surprise to see this general sentiment reflected in individual stocks, and none more so than Pfizer (NYSE:PFE), which closed yesterday’s session at $43.92 per share, well off its August highs where the stock peaked intraday at $51.86. The question is has the writing been on the wall for some time for this stock? And the short answer is yes, provided you are applying the volume price analysis methodology to the chart. In fact, it was this day that set in motion the train of events that followed.
Scrolling back we have the rally and breakaway from the VPOC at $39 per share followed by the breach of the resistance denoted with the red dashed line of the accumulation and distribution indicator which was a clear sign a new trend was likely to develop. This was duly delivered throughout July and August. The trend was punctuated with volatile days and, as expected, subsequent congestion before a resumption of this primary trend higher, the last of these events occurring in mid-August with a solid rally higher on rising volume. Everything is in agreement. Then comes candle 1, a weak candle in itself, with an extended wick to the upper body and on very high volume. An anomaly and a sure sign of weakness. The following day we see a repeat of the price action as the stock attempts to rally and fails, again on high volume. A third event occurs with yet another candle with a wick, before on candle 2 we see the clarion call for a reversal, with very high volume once more, and again a deep wick to the upper body. These two signals alone should have been a warning sign that at the very least we should expect weakness ahead. And when taken together with our other Quantum indicators such as the trend monitor, we have confirmation the bearish trend is now in play with the potential for the stock to return first to the support at $40 and thereafter to the VPOC denoted with the yellow dashed line at $39 per share.
Monday’s effort to rise was hardly stellar, with the stock closing on a green candle with an upper wick on good volume, with yesterday’s candle confirming the general weakness in the markets, but on declining volume, so there is the hope of a short term recovery.
Finally, I would always suggest a quick background check on the stock in terms of its earnings, insider dealings, short interest, etc on a free site such as Market Beat which presents this information in a very accessible format. Market Beat also tracks the social media for individual stocks and it’s always useful to know whether the stock is being heavily promoted and/or researched which these days will have an impact on the price.