How CVS Health's Stock Looks Heading Into Q4 Earnings Print

CVS Health Corp CVS popped up more than 1% higher on Tuesday, which put the stock into blue skies. The stock has run over 11% higher since reaching a low of $99.69 on Jan. 24.

The low was caused by overall market weakness amid the SPDR S&P 500 ETF Trust SPY pulling back to the $420.76 level on that same date and the run-up into blue skies may be in anticipation of a bullish reaction to the pharmaceutical company’s fourth-quarter earnings, which are expected to print Wednesday morning before the market opens.

On Jan. 11, CVS boosted its full-year 2021 projections and affirmed its 2022 guidance, saying it expects earnings per share to come in between $8.33 and $8.38 for 2021 and expects EPS to come within the range of $8.10 to $8.30 for 2022.

When the company printed its third-quarter results on Nov. 3, the stock reacted bullishly, gapping up 1.5% higher to start the session and rallying an additional 4.14% intraday.

See Also: How You Can Use Mark Cuban's New Website To Get Cheaper Drugs

The CVS Chart: CVS has been trading in a rising channel since Dec. 6, making a fairly consistent series of higher highs and higher lows. The pattern is considered to be bullish until the stock drops through the bottom of the lower ascending trendline.

• On Tuesday, the stock looks to be printing a bullish Marubozu candlestick, which indicates higher prices may come on Wednesday. It should be noted that because CVS reports earnings on Wednesday the candlestick pattern can be easily negated.
• CVS has been riding up the eight-day exponential moving average (EMA) since Jan. 26. Because the area has proven to be a solid support level, bullish traders can use a loss of the eight-day EMA as a stop.
• The stock is entering into overbought territory, with its relative strength index reaching the 70% level. Although the indicator can remain extended for long periods of time, bullish traders should be aware an RSI at this level can be a sell signal.
• Above the all-time high, there is no resistance in the form of price history but there is support below at $107.26 and $104.56.

Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.

Photo: Mike Mozart via Flickr