Pharmaceuticals - ready to move up?

I decided to go through some long term charts this weekend to see if I could find some sectors that have been out of favor, and now look ready to move up. I scanned down my list of Exchange Traded Funds and focused on month charts. For those who don’t know, a month chart is where each bar has the duration of one month (see bottom chart). The bottom chart on this post is the first one that caught my eye. It is a chart of the Pharmaceutical HOLDRs Trust (ticker: PPH). This sector has been in a down trend since late 2000. I liked how the chart is forming a head and shoulder bottom, and helped by today’s action looks to be breaking out to the upside. The day chart (top) shows more clearly, today’s advance of more than 2%. It just so happens, Merck and Schering-Plough both posted better than expected second quarter earnings today. I took a position shortly after the market opened today. It’s always nice to buy early into an uptrend and this sector looks to be coming off a nice basing pattern.