Here are a couple of pharmacies that have the remedy for what ails you. Check out CVS (CVS) and Rite-Aid (RAD) (August 14, 2015)
I want to look at drugs; move specifically drugstores, pharmaceuticals. Here’s why. I think they’re getting ready to make moves here. You can see Rite Aid ( NYSE:RAD ) has essentially been drifting sideways for a long time. You look at the weekly chart, and you can see it. Plenty of baby boomers are getting old and needing those drugs. So it’s not exactly like this is in a shrinking sector.
I’m looking at this; it’s at $9.00 right now. If the stock starts trading above 9.50, frankly the way this weekly chart looks, I would have to say $10.00 is in the bag. By the way you can think like, what’s that like 50 cents from 9.50 to 10.00? Dude; do the math as far as percent return, a move from 9.08 to $10.00, kind of works for me. Maybe that’s just me, maybe I’m just getting old, well I am getting old. Okay, so that really works.
Then CVS ( NYSE:CVS ), they really stuck it to the old guys because they took Viagra off of their list of drugs that are on their formulary list. In other words they probably won’t be able to sell as much of it. So that’s a drag, right? But it’s good for the stock because you get that the stock holds right above the 50-day moving average and this is working. The weekly chart shows this long volatility squeeze, kind of a breakout, and then this two-week rest. So I think this is actually a good time to be entering. You’re not buying a momentum stock where you’re just crossing you’re fingers hoping that it just keeps moving higher and higher.
Here you’ve got this stock that’s moving higher, and then you let it pullback right to the 50-day moving average where it’s been correct to buy the stock several times, and I think it is now. If the stock starts trading below 106.00, and see here’s the challenge, if it starts trading below 106.00 then, oh gosh, well then maybe it’s going lower. Okay fine, down at 101.00 is the 200-day moving average and it hasn’t been below there in quite a while. So where do you put your stop? Honestly I can’t tell you, I’m not going to tell you.
Have a risk management plan in mind. You need to figure that out because there are any number of support levels below. There’s nothing more painful, there are a few things actually, but where you get stopped out here at 8.20, then the stock hits 7.75, rockets up to $10.00 without you and you’re wondering what the heck happened. The bottom line is this, like on RAD ( NYSE:RAD ) and CVS ( NYSE:CVS ), I think these stocks work. As far as whether you put a stop on them, that’s an individual thing, I not just going to be dogmatic about it. I’ll just say know up front how much money you’re willing to risk.
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