Schaeffer's 43rd Anniversary Stock Picks in 2024

Dump This Stock After the Trump Bump

Cardinal Health stock rallied right into its 200-day moving average

Jul 12, 2019 at 1:52 PM
facebook X logo linkedin


Cardinal Health Inc (NYSE:CAH) was among the drug distributors that catapulted higher yesterday, after the Trump administration withdrew a proposal that aimed to end rebates paid to pharmacy benefit managers. As such, CAH stock yesterday rallied to its highest point in nearly two months. However, if recent history is any indicator, today's pullback could be just the beginning for the healthcare stock, suggesting traders may want to take profits.

Specifically, yesterday's surge took Cardinal Health shares right into their 200-day moving average, which handily rejected the equity's rally attempts earlier this year. According to Schaeffer's Senior Quantitative Analyst Rocky White, there have been five other times in the past three years when CAH tested resistance at its 200-day, following a lengthy stretch below the trendline. After those signals, CAH was lower a month later 100% of the time, averaging a loss of 6.94%.

At last check, CAH was already down 2.4% to trade at $47.11. The security has been in a channel of lower highs since peaking at $58.31 in mid-November, with support emerging in the $42-$43 area. From current levels, another 6.9% decline would put the shares around $43.80 -- back in the red year-to-date.

CAH stock chart july 12

Traders expecting another slide for CAH should consider speculating with short-term options, which are attractively priced at the moment. The security's Schaeffer's Volatility Index (SVI) of 25% is in just the 14th percentile of its annual range, suggesting near-term option premiums are pricing in relatively modest volatility expectations for Cardinal Health stock.

 

A.I.’s Dirty Little Secret: The Real Power Behind The AI. Boom ✨

Anyone who’s seen the The Matrix movies knows that A.I. needs power.  Lots and lots of power.

If you’ve seen the movie, you also know the grizzly results of the ensuing battle for that power.

Now, Wall Street’s battle for A.I. power won’t go to such extremes. Hopefully?

A.I. needs more power and that means more opportunities for stock traders in the know.

Download your free copy of “The A.I. Revolution: 4 Stocks to Buy Now”!