And then in August, a period of pharmaceutical strength begins. In The Stock Traders' Almanac, Jeffrey Hirsch makes an extensive study of stock market performance by sectors. His third-best-performing trade by average 10-year return (16.8%) is to go long biotech from early August to early March. I believe that's because this is the busy season for FDA drug application reviews.
The pharma sector does have an unusual level of political risk this year. Democrats have traditionally been hard on the pharma sector, and they look poised this year for a sweep. If the polls remain strongly blue, then we might see pharma underperform this year.
That said, I think a lot of the political risk is already priced in. Whereas most of the stocks I look at are at the very top of their 3-year valuation range in terms of forward and sales, pharmaceutical companies like Abbvie and Merck are trading in the bottom quartile of their 3-year valuation range. With forward PEG ratio around 2, forward PSG ratio around 0.5, and a whopping 5% dividend, Abbvie looks really attractively valued. I've been doing a lot of deal-hunting lately, and this is one of the only stocks I've seen with both a strong growth story and a valuation I really like. The analysts and options traders like it too; Abbvie has a 9.9/10 Equity Starmine Summary Score, and near-dated options positions are heavily skewed toward calls.
Daily technicals for Abbvie are negative, but weekly technicals are positive. It's possible it will bounce from here, at the 50-day EMA. However, I think a bounce from either the blue trend line or the 90.50 volume support may be more likely. Abbvie is cheap enough that I've already taken a sizable position here in dividend-paying shares, but I will add more if it hits my target area.