Pharmaceutical stocks have shown positive relative strength in recent weeks, following significant underperformance in last year’s fourth quarter. Space tends to be known for its defensive qualities, but has been attacking lately. Upward leadership has come from heavyweight Eli Lilly, which has rallied an impressive 31.4% year to date. The recent outperformance of pharmaceutical stocks has led to a confirmed breakout of the iShares US Pharmaceuticals ETF (IHE) against the S&P 500, taking the ratio above its 200-day moving average. The relative breakout marks a trend change that suggests pharmaceutical stocks could be a more sustained source of outperformance. Looking at the IHE chart, a major breakout has resolved a two-year upper trading range into a long-term bullish catalyst. Long-term momentum has shifted to the positive based on the MACD’s recent monthly “buy” signal, shown on the chart. The breakout generates a long-term measured movement projection of $252, which seems too aggressive to be relevant this year, but is still bullish. Medium-term momentum is strongly positive for IHE, and while it may consolidate a bit with the broader market, its breakout should drive an upside follow-through in the coming months. Regarding stop-loss positioning, initial support for IHE is now at previous resistance near $200, and secondary support can be measured from the rising 50-day moving average ($190). — Katie Stockton with Will Tamplin Access free Fairlead Strategies research here. DISCLOSURE: THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO PURCHASE SECURITIES OR OTHER FINANCIAL ASSETS. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT THE UNIQUE PERSONAL CIRCUMSTANCES OF ANY INDIVIDUAL. 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