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Is Pharmaceutical HOLDR ($PPH) Ready To Breakout Above Consolidation?- February 3, 2012

|Includes:IYZ, VanEck Vectors Pharmaceutical ETF (PPH)

Stocks traded mixed on Thursday as trade waned. For the eleventh consecutive day, both the S&P 500 and the DJIA have consolidated in a tight range, as the Nasdaq, Russell 2000 and the S&P MidCap 400 have set fresh highs. The market has thus far, been reluctant to pull back. Both the small-cap Russell 2000 and the Nasdaq tacked on modest 0.4% gains. The S&P 500 and the S&P MidCap 400 added 0.1% while the DJIA finished lower by a slim 0.1%. The strongest sectors on the session were precious metals, real estate, biotechnology, software and emerging markets. The day's laggards included defense, oil, transportation and pharmaceuticals.

The session ended with mixed internals. Volume fell by 10% across the board. Advancing volume was higher than declining volume on the Nasdaq by a ratio of 2 to 1 and on the NYSE by a ratio of 1.4 to 1. The market chopped for most of the day and in the absence of volume, we have to conclude that institutions were firmly on the sidelines today.

Although IYZ has been lagging some of our other trades, recently it has begun to show signs of relative strength. If IYZ puts in an inside day on Friday, it could very well break above resistance next week. It would be ideal if IYZ could form a bullish, mini-cup and handle pattern, as the cup is already in place. It's also not out of the realm of possibility that IYZ could gap up to complete its move.

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Stocks: PPH, IYZ