CVS Caremark Short term Bullish Reversal

Published on Thursday, 02 September 2010 01:42 Written by TradersHuddle Staff

New York, September 2nd (TradersHuddle.com) - Shares of CVS Caremark Corporation (NYSE:CVS) ended the trading session higher by $1.01 or 3.74% from its previous close. CVS' price action formed what is considered to be a bullish engulfing candle that could very well signal continuation of trend or reversal on ongoing weakness.

CVS Caremark Corporation (NYSE:CVS) is a pharmacy services company that operates a chain of drugstores located throughout the United States. The stores offer a wide range of branded and generic drugs, as well as household goods. The Pharmacy Service segment provides a range of prescription benefit management services, including mail order pharmacy services, specialty pharmacy services, plan design and administration, formulary management, and claims processing.

CVS' recent stock range has been formed by a trough where calculated support was defined at $26.84 and by a peak that established the resistance level at $32.09, which could be used by traders planning their trades.

Traders wanting to establish a position in CVS Caremark or traders that are already holding the stock can use the bullish engulfing pattern to their advantage. The pattern provides a defined risk as it shows where the bears were able to push the stock down, before the bulls stepped in.

The bullish engulfing pattern is a leading indicator that provides an alert to the bulls that the trend will continue or that there is an immediate reversal to the short term weakness seen on the stock. Below an Engulfing Bullish Candle Illustration: