There’s lately been plenty of evidence that investors are growing more cautious. Among other things, they are increasingly favoring defensive groups such as consumer staples and health care.

Not surprisingly, drug stocks, in specific, have plus been attracting their fair share of institutional fund flows, based on what the sector-relative chart is showing us.

After lagging the broad S&P 500 index all through the entire bull run, the AMEX Pharmaceutical Index has found its technical footing and recently broke through a key 5-year downtrend.

To be certain, investors have been less-than-enthusastic towards the group considering of shrinking new-product pipelines and fears

of a political backlash by high drug prices. Still, you have to wonder whether most of the “bad news” has been priced in.

If so, the pharmaceutical sector might be one group worth keeping a bullish eye on.

Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle.

Original post by Michael Panzner

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