As Pfizer (PFE) Extends Its Breakout, Wait to Buy on Weakness - TheStreet

Pfizer (PFE) - Get Report is extending yesterday's powerful breakout this morning. The stock is backing off a bit from the early highs and may need to consolidate before retesting the 52-week highs.

In the near term, Pfizer is stretched, but the bullish action this week remains intact. A move into new 2015 high ground seems likely in the coming weeks. Bullish investors should consider the stock a buy on weakness. Before the $36.50 level is pierced, Pfizer will need a pullback offering bulls low risk entry.

On Tuesday, Pfizer surged following its expectations-beating  third-quarter earnings report. This news-inspired breakout began with a powerful upside gap that lifted shares to new October highs. Heading into earnings, Pfizer had stalled near heavy resistance at its 200-day moving average. After a 12% rally off its September low, the stock needed a jolt to continue the run. Pfizer received a powerful one yesterday as investors aggressively bid up shares.

At this morning's early peak, Pfizer had stretched its rally off this month's low to 15%. The slight fade this afternoon indicates that some exhaustion is setting in. For patient bulls, a pullback from today's high will present an opportunity.

Pfizer has left behind layers of support during the October rally. The initial layer runs from $34.70 to $34. This key zone includes the stock's 200-day moving average and September high at the lower band. The upper band is marked by last week's high near $34.70. Just below this level is Tuesday's breakout gap at $34.37. In the near term, Pfizer bulls should view a fade back down to this zone as a very low-risk entry opportunity. Once a solid base is built here, Pfizer will be set up well for a run back up to the 2014 high.

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Disclosure: This article is commentary by an independent contributor. At the time of publication, the author was long PFE.