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Pfizer Enters Bear Market

10/17/11 01:48:55 PM
by Alan R. Northam

This statistical analysis shows Pfizer is now entering into a long-term bear market trend.

Security:   PFE
Position:   N/A

Of the 30 stocks making up the Dow Jones Industrial Average (DJIA), 20 are now in statistically significant long-term downtrends. By "statistically significant," it is meant that the 200-day linear regression slope indicator is below its zero line and the R-squared indicator is above its critical level. Within the last few daily trading sessions, Pfizer was added to this list.

The lower panel of Figure 1 shows the long-term statistical analysis of Pfizer (PFE). This figure shows the 200-day linear regression trendline (solid blue line), the upper one sigma channel line (dotted red line), the lower one sigma channel line (dotted green line), the lower two sigma channel line (solid green line), and the lower three sigma channel line (dashed green line). Besides their statistical significance, the red channel lines act as resistance and the green channel lines support.

FIGURE 1: PFE, DAILY. This chart shows the daily price chart of PFE in the lower panel along with its upsloping 200-day linear regression trendline and its associated upper and lower channel lines. The top panel shows the linear regression slope indicator followed by the R-squared indicator. This chart shows Pfizer entering into a long-term bear market trend.
Graphic provided by: MetaStock.
Figure 1 shows that Pfizer first broke down below its lower three sigma channel line (dashed green line) in early August to signal a possible trend change from a long-term bull market to a long-term bear market.

Shortly after signaling that Pfizer had started a new long-term bear market trend, price entered into a correction. Once this correction completes, the long-term downtrend will resume.

Looking at the linear regression slope indicator in the top panel of Figure 1, note that in early October this indicator moved below its zero line to signal the beginning of a new long-term downtrend.

The R-squared indicator in the middle panel of Figure 1 has, over the last few days, moved above its critical level to signal that a new statistically significant long-term downtrend has been established.

In conclusion, this analysis shows that two-thirds of the stocks making up the DJIA are now in long-term bear market trends. This analysis also shows that PFE has, within the last few daily trading sessions, joined the list of those DJIA stocks in long-term bear market trends. This analysis further shows that Pfizer is currently in a upward corrective rally that, once exhausted, will lead to the next leg down in its newly established long-term bear market trend.

Alan R. Northam

Alan Northam lives in the Dallas, Texas area and as an electronic engineer gave him an analytical mind from which he has developed a thorough knowledge of stock market technical analysis. His abilities to analyze the future direction of the stock market has allowed him to successfully trade of his own portfolio over the last 30 years. Mr. Northam is now retired and trading the stock market full time. You can reach him at or by visiting his website at You can also follow him on Twitter @TradersClassrm.

Garland, Tx
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