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When poring over charts this week I wanted to find a stock with low risk, a safe dividend and a potential reversal brewing. With every search I kept coming back to this one – Pfizer . It’s a stock that has driven investors crazy over the years. It had a magical run during Covid but has given back all those gains. However, from a risk/reward perspective the time feels right to revisit the trade. You can see that full round trip in price in the 10-year weekly chart below. Large pharma is mounting a comeback, and Pfizer seems poised to partake in the action. Shares appear to have found a bottom and are on the verge of a significant reversal. The setup We are keeping it very simple this week. Let’s review our reversal checklist: Price has broken above its downtrend on a weekly basis going back to its 2024 peak Near-term trend is now up with a consistent series of higher lows for a year Price is above a rising 50-week moving average Momentum indicator in its RSI trending higher and not overbought When we examine price action on a daily basis, we see a clearer picture of this potential turnaround. In this one-year chart above we have a few technical factors in play demonstrating a good risk/reward scenario at these levels. Support to the downside is clearly defined around the rising 50-day moving average Shares are forming an ascending triangle with a $30.50 upside target on a breakout A bullish golden cross has formed The trade Buy shares on recent weakness while Pfizer remains in this current uptrend. On a breakout above $27.50, expect a rally to $30 as shares claw back to their 200-week moving average at $32. The risk/reward isn’t optimal over the near term. If price falls below $25 one may want to step away and revisit another time. However, given the global backdrop and recent volatility, plus the stock’s 6.4% dividend yield, this trade could be one that helps you sleep better at night. The sector, especially large pharma, remains healthy and tends to act as a safe haven during market pullbacks. Other stocks within the sector like Johnson & Johnson , Merck and Eli Lilly continue to act well and now Pfizer, from a technical perspective, looks poised to join the party. — Jay Woods, CMT with Chase Games DISCLOSURES: Woods owns shares of Pfizer. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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