As you may know, David Tepper’s Appaloosa Fund recently got bullish on four (4) pharmaceutical stocks. “The fund took big new positions in Teva ($183 million), Pfizer ($156 million), and Mylan ($125 million) in the final three months of the year, according to a 13F filing. They were the fund’s biggest new positions in the period.” – Credit Business Insider
We already have a position in MYL, which is appreciating handsomely.
BMY is under accumulation, ranking “A” using Investors Business Daily’s stock check up feature. Additionally, we see the company sports a respectable 31.70% profit margin with a reasonable PE of 20. EPS % Change (Last Qtr) was +66%. BMY has its next earnings scheduled for April 27 before the opening bell.
RSI is rising, along with a very bullish MACD. Volume suggests persistent institutional interest. Price is above the 9/20ema and VBP. The latter shows major support at 56.00 (+/-).
You could generate $1,820 by trading covered calls on your position. You could sell 10 contracts of BMY 2017 21-APR 5
- Premium received:$1,820 (+/-)
- Potential Profit if Stock is Above Strike:$2,140
- Downside Protection: 3.2% (55.36)
Break even is just below the rising 9ema (55.75) If the stock pulled back to this point in the next few days, we could liquidate our position and remain whole, with no loss. The premium received allows a 3.2% cushion. Since the stock is rising along its 9/20ema, we are bullish. You could also buy puts for insurance should the stock shows signs of a pullback.
We also like the stock for a day trade, should bullish conditions persist in pharmaceutical stocks. Watch for a trade of the day setup for any new swing entries.
BMY popped up on a “Pocket Pivot / SOTEMA scan” along with a few others. The pocket pivot looks for volume that exceeds the previous 10 days down volume. It basically looks for institutions footprints. Therefore, we look to trade these candidates using the Trade of the Day setup and scalp them if they setup properly.
I’ll update this post with any new ideas from this scan, if they warrant new positions.
HAL FRED FB and a few others that we traded on Wednesday, are potential Trade of the Day setups as well. Watch them too.
Happy Trading
Vinny
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