Bristol-Myers and Other Safety Stock Breakdowns

Shares of Bristol-Myers Squibb (NYSE: BMY) began 2012 pulling back from new, 52-week highs. And after a four-day pullback that took the stock into oversold territory, traders began to re-enter the market for BMY on the buy-side, sending the stock higher by a little more than 1% over the next three days.

But rather than continue higher, the stock traded sideways before breaking down again. Sellers overwhelmed buyers in Thursday’s session to send Bristol Myers lower by more than 3%, and to the stock’s lowest level in more than a month.

However severe, the sell-off in Bristol-Myers is in some ways just a reflection of the current preference in the market for the risk-on, “bull market stocks” of finance and technology. As stocks from these sectors continue to march higher, consumer defensive names like Bristol-Myers and Altria Group (NYSE: MO) – off more than 1% again on Thursday – are among those left behind.

Heading into trading on Friday, shares of Altria Group are expected to open with a neutral rating of 6 out of 10 (upgraded from a 5 out of 10 shortly after the open) and a modest, positive edge of less than half a percent. BMY shares a 6 out of 10 rating with MO, but has a higher positive edge near 1%.

To be sure, there are safety stocks that are adored by traders right now. Shares of Clorox (NYSE: CLX) were up nearly 1% on Thursday, finishing higher for a third day in a row. And Coca-Cola Enterprises (NYSE: CCE) broke out of a month-long trading range on Thursday, gaining well over 2% and ending overbought below the 200-day moving average.

But there is weakness in the sector as well. Down more than 2% and closing lower for a second day in a row is Reynolds American (NYSE: RAI), joining MO and The Lorillard Group (NYSE: LO) as some of the poorest performing consumer defensive stocks heading into the final trading day of the week. Both RAI and LO have neutral ratings and likely will require additional selling before being able to attract sizable numbers of traders looking to buy.

Want more stocks? Read our latest from 7 Stocks You Need to Know: Volatility and Visa’s New High.

David Penn is Editor in Chief of TradingMarkets.com