The Invesco Pharmaceuticals ETF (PJP) has shown significant outperformance, particularly since its rally began in late March and continued through mid-August. After a pullback that found support in the 119 to 120 range, which aligns with previous congestion and a Fibonacci retracement level, PJP has resumed its upward trajectory.
The ETF formed an inverse head-and-shoulders pattern earlier this year, achieving its breakout target and contributing to a multi-month advance. Currently, PJP is forming another bullish pattern with a potential upside target of 137.
Its technical strength is further underscored by its consistent trading above the 50-day moving average, while only 25% of the 170 ETFs monitored are above both the 50-day and 200-day moving averages. This relative strength is particularly significant as other sectors, such as the semiconductor ETF (SMH), have shown signs of deterioration.
Frank Cappelleri, founder of CappThesis, emphasizes the importance of aligning with areas of relative strength, and PJP's successful bullish patterns and sustained breakouts position it as a strong candidate for investors looking for opportunities in a challenging market