CVS Finally Breaks Out

Posted on by Noah Kiedrowski

CVS Health (CVS) was not immune from the market declines inflicted by the COVID-19 downturn. Despite being in the traditional defensive healthcare space and confined to domestic operations, the stock could not break out and participate in the broader raging bull market post-COVID-19 lows. Despite a string of better than expected earnings, generating large amounts of free cash flow, paying down debt, and returning value to shareholders, the stock has up until recently been bogged down. The Aetna acquisition has been fully integrated while demonstrating robust earnings despite the COVID-19 backdrop. The company is finally getting some long-awaited respect on Wall Street, especially in conjunction with the positive vaccine developments. CVS has seen its stock rapidly appreciate as a function of strong company fundamentals and as a COVID-19 value rotation play. Despite the current stock appreciation, CVS still presents a compelling investment opportunity as the CVS-Aetna combination will drive shareholder value for years to come.

Perpetual Stock Slump

CVS has been in a perpetual stock slump with or without COVID-19 in the backdrop. CVS has been beaten down for years, plummeting by over 50% ($113 to $52) from its multi-year highs. Due to its recent breakout with strong company fundamentals and part of the COVID-19 value rotation, the stock has elevated to above $71. The company has posted a string of positive earnings with plenty of runway left in its growth from its Aetna acquisition. This was a bold and hefty price tag to pay yet necessary to compete in the increasingly competitive healthcare space, changing marketplace conditions, and political backdrop with drug pricing pressures. CVS made a defensive yet necessary acquisition to enable the company to go back on the offensive. The combination of CVS and Aetna was a bold and successful move after initial skepticism by investors. The CVS-Aetna combination will boost long-term growth prospects, restore growth, and fend off potential competition. This combination creates the first through-in-through healthcare company, combining CVS's pharmacies and PBM platform with Aetna's insurance business. The new CVS combines its existing pharmacy benefits manager (PBM) and retail pharmacies with the second-largest diversified healthcare company. Continue reading "CVS Finally Breaks Out" →

What To Expect Under A Biden Presidency

Posted on by George Yacik

Now that the Associated Press has declared Joe Biden the winner of the 2020 Presidential Election let's take a look at what we might expect from the presumed 46th president and the kind of economy he will inherit – and what he plans to do with it.

Thanks largely to his predecessor, Biden starts off with an inherently strong economy, even as it continues to heal and deal with Covid-19. Assuming that Biden doesn't follow his own comments and some of his advisors about imposing another lockdown, we can probably expect that the economy will eventually get back to the 2-3% annual growth rate we enjoyed before the pandemic.

Biden will also likely benefit from the recently announced introduction of a Covid-19 vaccine, although a lot needs to be done first, like manufacturing and then distributing hundreds of millions of doses worldwide, which will take some time. But assuming the vaccine is as efficacious as Pfizer says it is, that will be a further elixir for economic growth.

It's hard to imagine a Federal Reserve friendlier to the financial markets than the current one, so Biden will benefit from that as well. Biden is also not likely to be a thorn in Jerome Powell's side as much as the current White House occupant. Continue reading "What To Expect Under A Biden Presidency" →

Gold & Silver: One More Move Down?

Posted on by Aibek Burabayev

Old trading wisdom was the title for the previous post "Buy Rumors, Sell Facts" played out the same day it was published on the Blog. The price of gold dropped close to 6% from the top of $1966, and the pride of silver suffered even more as it fell more than 9% from the peak of $26.

The real reason behind that strong sell-off was the news that Pfizer's early data showed the COVID-19 vaccine is more than 90% effective, which brightened the outlook for the global economy and triggered the run from the safe-havens. Although my call in the previous post was based on the simple trading logic and the chart structure knowledge, it came true. Thank you for your support with helpful and prophetic votes and comments.

Let's get down to update; I switched to a lower time frame of 4-hour to highlight the current consolidation in more detail.

4 - Hour Gold Chart

This time gold shows a clearer structure than silver as the former broke below the counter-trend consolidation valley at $1859. This validated the current leg down then. Continue reading "Gold & Silver: One More Move Down?" →

Strong Demand Fuels Copper Futures Higher

Posted on by Mike Seery

Copper Futures

Copper futures in the December contract is currently trading at 315.40 after settling last Friday in New York at 317.70 a pound up over 200 points, continuing it's bullish momentum as prices are right near a 3 year high.

Fundamentally speaking, this commodity has everything going for it due to extremely strong demand because of the housing market, which continues its torrid pace. I don't think this situation will change anytime soon as I see no reason to be short copper. If you are long a futures contract, I would place the stop-loss under the 10-day low, which stands at 3.0285, as an exit strategy. However, the monetary risk will also be reduced in next week's trade as the chart structure will continue to improve.

Copper prices are trading far above their 20 and 100-day moving average. This is the strongest member of the precious metal sector. I still think there's significant room to run to the upside as I will be looking at a possible price pullback before entering into a bullish position.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Silver Futures

Silver futures in the December contract settled last Friday in New York at 25.66 an ounce while currently trading at 24.82 down about $0.85 for the trading week, experiencing tremendous price swings daily as the volatility is extremely high. Continue reading "Strong Demand Fuels Copper Futures Higher" →

COVID Vaccine News Boosts Stocks

Posted on by The INO.com Team

On Monday, Pfizer's news that the COVID vaccine it is developing with BioNTech was more than 90% effective in a trial pushed stocks to record levels with all three of the major indexes triggering new green weekly Trade Triangles indicating that long positions could be in order. But after that significant move higher, the market came back to earth a bit with mid-week weakness.

However, the indexes end the week on a high note with the DOW gaining +1.3%, S&P 500 +1.1%, and the NASDAQ will post a daily gain of +.63% on the day.

The DOW leads the pack with a weekly gain of +4% as investors dumped tech and bought the cyclical stocks that would benefit from an economic comeback next year. The S&P 500 gained +1.9% on the week, and the NASDAQ was unable to get into positive territory, losing -.78% for the week. Continue reading "COVID Vaccine News Boosts Stocks" →