NEW YORK (Real Money) -- I'm staying conservative on the bull side for now. One big day doesn't give me the confidence I need to get aggressive. Earnings are pouring in and having an impact on many technical setups, so just about any name that hasn't reported now comes with a buyer/seller beware sign.
The chart wasn't all that exciting into earnings, but the push upward on Tuesday has set this one up to slowly climb higher. This rounding pattern in black is an under-appreciated consolidation pattern. It did occur within a wide trading channel, but the higher low now gives it a bullish tint. It also provides a clear stop or buyable pullback data point. Should Pfizer retrace into the mid-$34 range, I would see it as a buy. If the stock falls under $34, then it's likely to test $33.25, so a stop would be triggered. That aside, PFE looks buyable even here.
We have a strong short-term relative strength index (RSI) confirming the price action. Notice how they mirror each other leading us to conclude RSI is confirming here, not leading. Adding to the fire could be the bullish crossover in the slow stochastics. This hasn't been a slam dunk, but crossovers like this have either resulted in a strong bullish run or a neutral slant. The positive is neither of those two are bearish.
On the weekly chart, the close this Friday looks to be important. After a big six-month run, Pfizer has spent nearly the same amount of time consolidating in a channel. This has created a very large bull flag with the potential to push the shares to the $40 level before the end of the year. While that may not seem like a big move, I would consider it so for a more conservative name.
I would like to see the Chaikan money flow (CMF) push into the green here while there is this bullish crossover in the vortex indicator. Look back to late October 2014 and you'll see that same pattern. Ironically, that was the start of the big six-month move. It very well could be setting up again. The stop here is a break of $33.
I feel stronger about the weekly chart, so that is the thesis behind my new long position in Pfizer. I'm not in any hurry and may look to augment the position with some ratio call spreads or covered calls. But for now, I just took a new long on Tuesday.
Editor's Note: This article was originally published at 10:55 a.m. EDT on Real Money on July 29.
This article is commentary by an independent contributor. At the time of publication, the author was long PFE.