Healthcare Stocks ABT and BSX Signal Upside

Abbott Laboratories and Boston Scientific stocks are near notable moving averages

by Josh Selway

Published on Oct 10, 2019 at 1:35 PM
Updated on Jun 24, 2020 at 10:16 AM

Rummaging through our recent technical studies here, courtesy of Schaeffer's Senior Quantitative Analyst Rocky White, we noticed two healthcare stocks flashing bullish signals. Namely, Abbott Laboratories (NYSE:ABT) and Boston Scientific Corporation (NYSE:BSX) are near moving averages that historically have resulted in nice near-term returns. As such, let's take a closer look at the data around the shares of ABT and BSX.

ABT 200-Day Could Be Supportive

Abbott Laboratories stock has pulled back to its 200-day moving average, and the last three signals of this type have sparked 21-day moves of 5.9% on average, while the return for the time period has been positive each time, too. This trendline is also near the $80 level, which was a ceiling back in March, suggesting it may have switched to a more supportive role.

ABT stock was last seen at $80.03, so a 5.9% move would have it near the $85 mark. The shares traded as high as $88.76 back in July.

Options traders are certainly well positioned to take advantage of an upside move. Data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 3.30, which ranks in the 91st annual range. In other words, call buying has been unusual popular. This has resulted in a build-up at near-term strikes, including the front-month October 87.50 call, and the November 85 call.

abt stock oct 10

BSX Stock Could Take Back $40 Level

Medical device stock BSX, meanwhile, has pulled back to its 320-day moving average. White's data shows an average 21-day gain of 6.1% following the last five pullbacks like this, and 80% have produced positive returns. With the shares last seen at $38.19, another move like that would have the stock easily above $40 again.

In the options pits, demand has been high, with open interest resting in the 96th annual percentile, with put open interest in particular coming in higher than normal, though peak open interest is at the October 44.50 call. One notable take away on Boston Scientific for options traders is that it hasn't been able to surprise with big moves, since its Schaeffer's Volatility Scorecard (SVS) of 10 means it's rarely topped volatility expectations in the past year.

 


A Schaeffer's 39th Anniversary Exclusive!

8 Top Stock Picks for 2020

Access your FREE insider report before it's too late!


  
 
 

Partnercenter