Despite a trading lull last week, we still saw a few sector charts take a decisive shape. Namely, the pharmaceutical stocks look like they're struggling again, telecom looks like it's at a crossroads, and the tire industry stocks finally appear to be pointed lower. Today we'll detail how these group are falling in or out of favor.

Pharmaceuticals

We actually went conditionally bullish on pharmaceuticals in the August 28 Sector Spotlight, and re-affirmed that opinion on October 23. We wanted to see a reverse head-and-shoulders pattern neckline broken by the Dow Jones Pharmaceutical Index (DJUSPR). The neckline from August 28 was pegged at 269, which was topped just a few days later.

So what's that got to do with now? Didn't we get  the bullish confirmation we needed in October? Yes, we did, when the index reached as high as 283. But we warned then that the longer-term moving averages like the 50-day line (then at 273) would have to hold up as support for us to maintain our stance. Well, it didn't. This index plunged under its 50-day average on the November 9, and found resistance there on November 20. With the index currently around 272, this uptrend looks pretty much to be a memory. Thus, we're dropping our bullish bias, at least for the time being. We still favor the pharmaceutical industry, but the chart says now may not be the best time to be long. We intend to keep this group in our back pocket.

The better-known stocks in this group include Pfizer (PFE), Johnson & Johnson (JNJ), and Merck (MRK).

Dow Jones Pharmaceutical Index (DJUSPR) - Daily

Tires

Last week we mentioned the Dow Jones Tire index (DJUSTR) appeared top be very vulnerable, but we needed to see a specific trigger before really saying a breakdown was in the works. For this index, the particular breakdown would be a move under the prior week's low 57.77. Well, it never happened last week, but today's (Monday's) weakness translated into a low under 57.77, a technical breakdown. We think this will indeed be enough damage to start the selling spiral all the way down towards 50.50 or so.

Key stocks that make up this index include Goodyear (GT) and Cooper (CT).

Dow Jones Tire index (DJUSTR) - Daily

Telecom

We've been fans of telecom for months now, but it's only been in the last few days that the stance has come into question. Or to be more precise, we're not sure the bigger uptrend has come into question.

After hitting a high of 165.20 in late October, the Dow Jones Telecom Index (DJUSTL) has fallen back to its current level around 158. We initially thought this slide was the end of a very good run for the sector, and the beginning of a significant period of weakness. However, the 50 day moving average line has stepped in recently, which makes us think these stocks are just taking a breather.

As for where this chart is headed next, it really all depends on whether or not the 50-day line can hold up as support long enough to revive the rally. It may not be clear for a few days if that's going to happen or not though. The same goes for a breakdown. If the 50-day average breaks as support, we're looking for more selling to follow.

On a side note, part of our bullish bias on telecom has to do with cyclical trends. This group lagged in 2003 and 2004 when other stocks rallied. Sector rotation theory, though, says these names are apt to lead now.

The biggest stocks in this group are SBC Communications (T), Verizon (VZ), and Bellsouth (BLS).

Dow Jones Telecom Index (DJUSTL) - Daily

Price Headley is the founder and chief analyst of BigTrends.com.