CHART ANALYSIS

Abbott Laboratories

05/22/13 03:14:39 PM

by Koos van der Merwe

Abbott Laboratories (ABT) generates the highest percentage of its revenue through pharmaceuticals, at around 62%.

Security: ABT
Position: Buy

Abbott Laboratories (ABT) got a bit of a bump on Monday after a couple of Wall Street analysts declared their affection for the company's shares and praised the pharmaceutical firm and medical supplier for diversifying in an increasingly competitive climate wrought by generic drugs. Goldman Sachs analyst David Roman upped his rating on the stock to buy from neutral and raised his 12-month price target to $44 a share.

Figure 1. Weekly chart of Abbott Labs with Elliott wave count.

Graphic provided by: AdvancedGET.

The chart in Figure 1 is a weekly chart with an Elliott Wave count that is suggesting that the share price could be topping out in a WAVE V. The RSI indicator is not confirming this, suggesting that the share price could rise further. Looking at the flag pattern shown, the target suggested is $32.95. (29.30-17.90=11.90+21.55=32.95). With the share price presently higher than $32.95 we could expect a correction in the near future.

Figure 2. Daily Chart showing JM Internal Band.

Graphic provided by: AdvancedGET.

The daily chart in Figure 2 shows a buy signal given by the JM Internal Band indicator on March 27, 2013. The JM Internal Band indicator is a 15-period simple moving average offset by 2% positive and 2% negative. The RSI indicator is suggesting strength as shown by the blue arrow support line even though the trend suggested by the red arrows is suggesting negativity.

I would be a buyer of ABT at present levels but for trading only with short stops. Investors should wait for the major ABC correction which looks as though it could happen at any time.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

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CHART ANALYSIS

Abbott Laboratories

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