Back on May 23rd Premier Markets profiled a short play in Bristol Meyers (BMY). The Drug Index had an overbought reading of 70% on its bullish percent chart and was generally looking weak. While other drug stocks had been participating in some nice rallies, Bristol Meyers was looking like one of the weaker stocks in a weaker group.
Bristol Meyers Point and Figure Chart
At the time, BMY had just flashed a spread triple bottom sell signal. From there it moved down two boxes before some buyers entered the picture and ran the stock up to resistance at $58. It came within inches of triggering our stop, but reversed into a column of Os. If the prior trend of higher lows holds, BMY may only have one box of downside left. The performance of fellow drug stock Forest Labs (FRX) is also suggesting that Bristol may have limited downside.
Forest Labs Point and Figure Chart
Forest Labs had an impressive run up in May, but has seen a $7 pullback in June. During that time BMY has only lost $3, suggesting that there is no selling interest, and could be under accumulation. At this time Premier Markets is lowering our stop to $56.25 (just above the downtrend on the 60-minute chart).