Pharmer's Fields

After all the jacks are in their boxes and the clowns have all gone to bed
You can hear happiness staggering on down the street
Footprints dressed in red
And the wind whispers Mary
--Jimi Hendrix

Seeing some nice technical action in the pharma space. Merck (MRK) has broken to fresh 52 wk highs after resolving a pennant like pattern to the upside.

Pfizer (PFE) also vaulted higher over the past couple of days on big volume. Currently it's right at its 52 wk high.

Interestingly, these moves come on the back of the proposed health care reform bill. If you're noodling over cause and effect, one argument is that market participants are betting that the health care bill will die on the vine, thus freeing the druggies from more regulatory shackles. Another argument is that market participants are betting that the health care bill will pass, and that the regulatory environment would actually be a big win for pharma.

I've heard smart people argue both sides. Personally, I'm hoping it's the former for the sake of our country but my strategic mgt side is whispering in my ear that it's the later.

How could a government controlled environment possibly be good for the pharma folks? Because regulated industries tend to preserve the franchises of incumbents and squelch new entry. Efficiency and innovation (read: future standard of living) suffer.

Never thought about it this way when I put these positions on, but this pharma trade may turn out to be a decent hedge against the collective stupidity of our elected officials in Washington.

positions in MRK, PFE