There are few sectors that remain in bullish uptrends. For the past two months the top performing sectors in order have been silver, copper, oil, shipping, and gold. These are not the type of sectors that create new bull markets for the DOW and Nasdaq.

They are the sectors though that can make you money and we've been participating in the metals sectors and its been a fun ride. It's one that I think will continue through the rest of the year. You can make money while everyone else holds sinking stocks and hopes.

But as I've written over the past few days to continue to make money in the stock market you have to look ahead to what sectors have the potential to start new bull markets. And there is one sector that I have my eye on: drug stocks. And when I say drug stocks I don't mean biotech stocks, but drug manufacturers.

The drug stock sector has been in a phase four bear decline since 2001. That decline came to a halt at the end of last year and drug stocks have been consolidating ever since. In the first half of this year the drug stock sector broke its 5 year resistance downtrend line and also broke its declining relative strength ratio downtrend - its trend of underperforming the stock market. Drug stocks have been one of the strongest sectors in the market all year.

They appear to have been in a stage one base for the past year, with resistance around current levels on the PPH drug stock ETF. If they pullback or consolidate at these levels and then breakout over the next couple of weeks they should start a stage one bull market. This is the only sector in the entire stock market in this position.

Sector leader Pfizer(NYSE: PFE) bears watching. Since 2005 it has been trading in a range of 22 and 28 to form a reverse head and shoulders pattern. If it pauses at this level and then breaks above 28 on high volume it should begin a year long rally that it will take it to the high 30's and possibly even beyond.

Merk(NYSE: MRK) is already charging higher. There are several dozen other stocks in this sector and I don't have time to go through all of them for you right now. But there is one other thing about this sector that you should know - historically it tends to go up when the rest of the market drops as investors park their money into it as a safe haven, because the profits in drug stocks aren't cyclical. Slow times don't stop people from buying medicine - and they don't stop smart investors from making money either.

For today's WSW
Power Investor update on gold stocks click here [1]