Pharmaceutical stocks have recently been decoupled from the broader market, giving the group an increasingly important leadership position in healthcare. Eli Lilly is a leader in this space, already hitting new highs, and its strength is reflected in sector-level proxies like the iShares US Pharmaceuticals ETF (IHE). The positive absolute and relative momentum for the pharmaceutical company creates a favorable environment for other major players, including Johnson & Johnson, to follow suit. IHE is extending its cyclical uptrend towards new highs, a move confirmed by the weekly moving average convergence/divergence (MACD) crossover reflecting new medium-term momentum. Lilly owns roughly 25% of IHE, so its breakout would be a meaningful tailwind for the ETF, but IHE’s strength suggests leadership extends beyond a single name. On the relative front, the IHE to SPX ratio has rebounded with support from the 200-day (40-week) MA, suggesting that the pharma company is positioned for further outperformance in the coming weeks. This ratio is also well-positioned for the long term based on the upward slope of the 40-week moving average. Johnson & Johnson is also improving, with charts suggesting the company could reassert its leadership in the pharmaceutical industry after a period of consolidation. Weekly stochastics indicate an oversold rally, a constructive development that often overlaps with medium-term lows. JNJ continues its upward streak on the weekly MACD histogram and its momentum is improving. In terms of key levels, the first support is defined by the rise of the 200-day moving average (around $213), with the high around $249 acting as resistance. Daily charts add important short-term triggers. JNJ has an active countertrend ‘buy’ signal from DeMARK Indicators® and the daily MACD has returned to a ‘buy’ signal, reinforcing the potential for continued upside in the near term. The change in momentum became more obvious as JNJ rose above the 50-day moving average and entered the daily cloud. Relative trends are another reason why JNJ is worth highlighting here. The JNJ to SPX index ratio has seen a countertrend cyclical rise since the beginning of 2025, defined by a series of rising lows. The strength of this countertrend lies in a multi-year downtrend, but the cyclical uptrend appears to have staying power. Currently, with the ratio close to the 40-week moving average support and oversold, JNJ is in a relative testing ground and looks poised to reach even higher levels in both absolute and relative terms. Pharmaceutical industry leadership is strengthened by IHE’s rise to new highs and a new weekly MACD crossover, with JNJ showing the type of intermediate signal that could occur ahead of a rotation into other large-cap stocks. With support defined by the 200-day moving average and resistance near $249, JNJ’s risk-reward profile is becoming clearer as momentum builds. —Katie Stockton with Will Tamplin Get free access to Fairlead Strategies research here. Disclosure: All opinions expressed by CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, its parent or affiliates, and may have been previously disseminated on television, radio, the Internet, or another medium. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. 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