GO
Loading...

Stock Chart Gorgeous as Mona Lisa

Tuesday, 8 Jan 2013 | 6:26 PM ET
Cramer: Does History Repeat Itself?
Mad Money host Jim Cramer illustrates how past chart patterns could help predict future moves.

If you follow technicals a top analyst tells Cramer there's a good looking chart that will absolutely turn your head.

According to Tim Collins, a Cramer colleague from TheStreet.com, Pfizer is nearly as gorgeous as the Mona Lisa.

Well - gorgeous from a chart watcher's perspective.

Pfizer isn't exactly what most people think of as gorgeous - it's not even thought of as a big mover these days. It's thought of as an old school pharma company with a healthy dividend, but not much in the way of growth.

However, when Collins looks at the daily chart, he sees things that others don't - a pattern that suggests Pfizer could be ready to run.

Pfizer has made something called an inverse head and shoulders pattern – it's the ultimate in bullish patterns in technical analysis.

According to Collins, Pfizer made the left shoulder as it rallied through the month of October and then declined aggressively. Then in November the stock bottomed to form the head, and last month, in December, we caught a rally and then a pullback, which created the right shoulder.


Laurent Gillieron

The key with this pattern is the neckline -- the line that connects the highs from the two shoulders.

When a stock breaks out above that line, it tells someone like Collins that it's time for a big move higher.

Pfizer's neckline is at $25.80, and it crossed over that level just last week.

But that's not all.

Last week, Pfizer broke out above a key level – a ceiling of resistance at $25.50. If the stock closes above that level again this week, Collins believes the stock could resume its long march higher.

In addition to bullish upside patterns – other patterns suggest downside may be limited.

Collins believes Pfizer has a healthy floor of support at $24.60 and even if that breaks, two more key support levels lie in the $23 range.

What's the bottom line?

"It's rare that you get a safe boring, high-yielding drug stock like Pfizer that also has a really hot chart, at least as interpreted by Tim Collins," said Cramer. "For me, that's still one more reason why Pfizer's a buy buy buy."


Read More: Cramer: Real Opportunity in This Drug Maker



Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

  Price   Change %Change
PFE
---

Contact Mad Money

  • Showtimes

    Monday - Friday 6p ET
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.