Possible Rebound for CVS Health Stock on the Horizon

CVS Health Corp: A Cautionary Tale for Healthcare Investors?

Yesterday, health insurance stocks experienced a decline due to lower-than-expected Medicare Advantage payment rates. This news had a ripple effect on CVS Health Corp (NYSE:CVS), which saw a 7.2% drop – its largest daily percentage loss since August. Although shares recovered slightly today with a 0.7% increase to $74.37, the recent pullback has brought CVS close to its 200-day moving average, a trendline that has historically been bullish.

Schaeffer’s Senior Quantitative Analyst Rocky White suggests that those considering buying the dip should take note of CVS’s recent performance. In the past, when CVS has been within one standard deviation of its 200-day moving average, it has resulted in an average gain of 3% one month later. Additionally, the stock’s 14-day relative strength index (RSI) of 29.4 indicates that it is oversold and could see a short-term bounce before reversing course again. Before yesterday’s drop, CVS had been on an upward trend, with only three daily losses since March 14 and an overall decrease of 5.7% since the beginning of the year.

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