Pharma Stock Flashing Buy Before Earnings

BHC stock could bounce soon, if past is prologue

May 2, 2019 at 10:55 AM
facebook X logo linkedin

Bausch Health Companies Inc (NYSE:BHC) -- née Valeant Pharmaceuticals -- is schedule to report earnings before the open next Monday, May 6. Ahead of the event, BHC shares have pulled back to a key trendline, which could be a short-term buy signal, if recent history is any indicator.

The past year has been choppy for Bausch Health stock. Outside of a massive December plunge to the $17.20 level, BHC has spent most of the last 12 months bouncing between support in the $21-$22 area -- which represents a 20% year-to-date gain -- and resistance in the $26-$27 region. The security is at the lower end of that range now, but is back within one standard deviation of its 320-day moving average, after a few months above it.

Over the past three years, there have been four similar pullbacks to this trendline, after which BHC stock was higher by 10.32%, on average, a month later, per data from Schaeffer's Senior Quantitative Analyst Rocky White. At last check, the equity was trading at $22.88. Another 10.32% jump from current levels would put Bausch shares around $25.24.

BHC stock chart May 2

It appears recent BHC options buyers are expecting another bounce off support. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open more than four calls for every put during the past two weeks. The resulting 10-day call/put volume ratio of 4.09 is higher than 78% of all other readings from the past year, pointing to a healthier-than-usual appetite for long calls over puts of late.

Echoing that, Bausch Health sports a Schaeffer's put/call open interest ratio (SOIR) of 0.37, indicating that call open interest more than doubles put open interest among options expiring within the next three months. This SOIR is lower than 97% of all other readings from the past 12 months, suggesting short-term options traders have rarely been more call-biased in the past year.

Options bulls have earnings history on their side, too. BHC shares moved higher after six of the last eight earnings reports, jumping 8.9% the session after earnings a year ago.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI