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Tuesday, January 14, 2020 11:56:06 AM
By: TheStreet | January 14, 2020
• CVS Health has converging support and resistance levels, thrusting shares into a make-or-break setup. Here's how to trade CVS stock now.
CVS Health (CVS) has come a long way from its second-quarter lows near $50, although shares have been relatively stagnant over the past few months.
Walgreens Boosts Alliance's (WBA) recent plunge after missing on earnings has done little to shake CVS stock, although the action certainly hasn’t helped. The stock now sits in a make-or-break position, at least in the short to intermediate term.
Shares gapped higher in November on better-than-expected earnings, and continued higher to a 52-week high of $77.03 later in the month. Since then though, shares have had trouble garnering much upside momentum, falling about 5% from those highs over the last six weeks.
Can CVS stock get back on track? That’s exactly what the Real Money team is trying to answer on Monday, after naming CVS its Stock of the Day.
Let’s look at the charts.
CVS Health is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells CVS? Learn more now.
Trading CVS Stock
Chart courtesy of Stockcharts.com
The recent action surely has some bulls disappointed in CVS shares. That’s fair, particularly as the rest of the U.S. stock market continues to bombard its way to record highs.
While CVS stock is only a few percent below its 52-week high, it’s well below its all-time high, which sits at just over $100 a share and was set back in mid-2015.
As for the “right now” setup, CVS lacks momentum. Not only has the stock been trending sideways to lower for almost two months, but it’s now below its 20-day and 50-day moving averages. The action has allowed a short-term downtrend mark to form (blue line) as well.
That said, CVS has a longer-term uptrend mark (purple line) and a level of support near $71.50 (black line).
This is where we get our make-or-break takeaway, as both support and resistance are in play and closing in on each other.
If the stock moves lower and closes below $71.50, short-term bullish traders may consider stopping out of the trade and stepping to the sidelines. It will put the stock below all recent support and uptrend marks, leaving room down to the $68 level on a potential decline.
However, if CVS shares are able to clear the $73.75 mark on the upside, hat may fuel a run back up to $77 or higher. A move over $73.75 will propel shares over short-term downtrend resistance, as well as the 20-day and 50-day moving averages. In short, there will be nothing in the way to prevent a run back to its 52-week high.
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Recent CVS News
- Aetna Better Health of Michigan recommended for CHCP contract • PR Newswire (US) • 04/09/2024 04:00:00 PM
- CVS Health® expands pharmacy tuition assistance and scholarship programs • PR Newswire (US) • 04/03/2024 12:00:00 PM
- CVS Health to hold first quarter 2024 earnings conference call • PR Newswire (US) • 04/01/2024 01:00:00 PM
- CVS Health® invests more than $3M in organizations improving health outcomes in Phoenix • PR Newswire (US) • 03/27/2024 06:00:00 PM
- CVS Health announces quarterly dividend • PR Newswire (US) • 03/21/2024 02:55:00 PM
- AM Best Affirms Credit Ratings of Most of CVS Health Corporation’s Aetna Inc. Subsidiaries; Withdraws Credit Ratings of Members of Texas Health Aetna • Business Wire • 03/13/2024 09:03:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 03/05/2024 11:09:28 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 03/01/2024 10:21:05 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 03/01/2024 10:20:02 PM
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- CVS Health to participate at the 45nd Annual Raymond James Institutional Investors Conference • PR Newswire (US) • 02/21/2024 02:00:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/16/2024 11:46:48 PM
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