The charts and technical indicators of CVS Health (CVS) have strengthened in recent weeks and are now poised for an important upside breakout. Let's review the charts.
In this updated daily bar chart of CVS, below, we can see that prices soared in early November and then chopped sideways in recent weeks. CVS has been moving strongly in recent days and looks set for a breakout to new highs.
Prices are above the rising 50-day moving average line which was recently tested. The 200-day moving average line also has a positive slope and we can see a bullish golden cross of the 50-day and 200-day averages in early December.
The On-Balance-Volume (OBV) line is okay but not what I would call robust. The Moving Average Convergence Divergence (MACD) oscillator is turning upwards to a fresh buy signal.
In this weekly bar chart of CVS, below, we see the past three years of price action. CVS is in a wide-ranging sideways trend. Prices are above the rising 40-week moving average line.
Both the OBV line and the MACD oscillator are bullish.
In this second weekly bar chart of CVS, below, we look at five years of price history. Here the past few years look like a base pattern after a long decline. A weekly close above $75 looks like an important breakout point.
In this daily Point and Figure chart of CVS, below, we can see that a trade at $75 will be an upside breakout and open the way for potential gains to the $110 area.
Bottom line strategy: Aggressive traders could go long CVS at current levels and on strength to $75 and above. Risk to $67. The $110 area is our price target.
(CVS Health is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells CVS? Learn more now.)
