4 Trade Ideas for CVS Health: Bonus Idea

• Posted by Greg Harmon
• on April 10th, 2023

Here is your Bonus Idea with links to the full Top Ten:

CVS Health, $CVS, comes into the week approaching resistance in a reversal higher. The Bollinger Bands® have squeezed and are looking to open. The RSI is rising through the midline with the MACD rising but negative. There is resistance at 78.50 and 81.50 then 83 and 85 before 86.50 and 87.50 then 88.50. Support lower comes at 76.75 and 76 then 74.25. Short interest is low at 1%.

The stock pays a dividend with an annual yield of 3.12% and will trade ex-dividend starting April 20th. The company is expected to report earnings on May 3rd. The April options chain shows biggest open interest at the 75 and then 72.50 and 70 strikes on the put side. On the call side it is biggest at 80. In the May chain open interest is biggest at the 87.50 strike on the put side then 75. On the call side it builds from 75 to a peak at 90 and then tails to 105.

CVS Health, Ticker: $CVS

Trade Idea 1: Buy the stock on a move over 78.50 with a stop at 76.

Trade Idea 2: Buy the stock on a move over 78.50 and add a May 77.50/72.50 Put Spread ($1.80) while selling the May 82.50 Call (90 cents).

Trade Idea 3: Buy the April/May 80 Call Calendar ($1.25) while selling the May 72.50 Puts ($1.15).

Trade Idea 4: Buy the May 72.50/80/85 Call Spread Risk Reversal (free).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with the first week of April in the books, saw equity markets were mixed with the large caps and tech focused indexes digesting gains while the small caps took a blow to the body.

Elsewhere look for Gold to continue its uptrend while Crude Oil consolidates the renewed move higher. The US Dollar Index looks to continue to move lower while US Treasuries test the top of broad consolidation. The Shanghai Composite looks to also test the top of consolidation while Emerging Markets continue sideways.

The Volatility Index looks to remain stable and low making the path easier for equity markets to the upside. The charts of the SPY and QQQ remain strong on the longer timeframe while on the shorter timeframe both remain in short term consolidation. The IWM remains weaker holding in consolidation after a failed short term move higher. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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