CVS Stock Chart Suggests Today's Gains are Questionable

CVS may not be above its 50-day trendline for long

CVS Health Corp (NYSE:CVS) stock has been under pressure for quite some time, but today the shares are rallying after an update from the pharmacy chain. CVS said it's increasing its health hubs to 1,500 stores by the end of 2021, expanding the services offered at each location, as well. This news has the shares trading 3.7% higher at $55.34.

However, this move is basically nothing compared to the equity's year-to-date deficit of 15%, and technical data suggests a quick reversal could be coming on the charts. A study from Schaeffer's Senior Quantitative Analyst Rocky White shows that run-ups to the 50-day moving average has sparked an average 15-day loss of 6.8% following the last four signals of this type. If a similar sell-off happens this time, the shares would be back near their 52-week low of $51.72.

As we've pointed out before, the analysts covering CVS have remained mostly bullish, with more recommending it as a buy, and not a single "sell" recommendation on the books. In response to the company's analyst day this morning as a whole, Evercore ISI weighed in positively, saying the earnings-per-share outlook given for the coming years was achievable.

Elsewhere, options traders have been active, with total open interest of 949,121, ranking in the 91st annual percentile. In today's trading, call volume has already topped the daily average, but near-term traders have actually been less call-heavy than usual. For instance, the Schaeffer's put/call open interest ratio (SOIR) of 0.95 ranks in the 96th annual percentile, showing call open interest among contracts expiring within three months outweighs put open interest by a much slimmer-than-usual margin.