NEW BEARISH Plays
Tenet Healthcare Corp. - THC - close: 35.04 change: -0.89
Stop Loss: 37.65
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on October -- at $---.--
Listed on October 14, 2015
Time Frame: Exit prior to earnings on November 2nd
Average Daily Volume = 2.1 million
New Positions: Yes, see below
The healthcare sector has seen huge gains in the stock market over the last few years. Unfortunately the group appears to have peaked in late summer this year. The market correction in August hit the group hard. Now investors are selling the rallies. Several healthcare stocks have found themselves in a bearish trend of lower highs and lower lows. Wall Street is turning cautious with more analysts downgrading healthcare stocks from buy to neutral.
THC is in the healthcare sector. According to the company,
"Tenet Healthcare Corporation is a diversified healthcare services company with more than 130,000 employees united around a common mission: to help people live happier, healthier lives. Through its subsidiaries, partnerships and joint ventures, including United Surgical Partners International (USPI), the company operates 87 general acute care hospitals, 19 short-stay surgical hospitals and over 440 outpatient centers in the United States, as well as nine facilities in the United Kingdom. Tenet's Conifer Health Solutions subsidiary provides technology-enabled performance improvement and health management solutions to hospitals, health systems, integrated delivery networks (IDN), physician groups, self-insured organizations and health plans."
THC's stock popped in late June when the U.S. Supreme court narrowly affirmed the Affordable Care Act (a.k.a. Obamacare). The rally ran out of steam several days later forming a lower high. Since then THC has been suffering with a very pronounced trend of lower highs and lower lows.
The company's most recent earnings report was August 3rd. THC reported their Q2 earnings were $0.75 a share. That was 31 cents better than expected. Revenues beat expectations with a +11% rise to $4.49 billion. Unfortunately management significantly lowered their guidance. Wall Street was expecting THC to earning $2.23 per share on revenues of $19.17 billion for fiscal 2015. THC just lowered their 2015 guidance to $1.32-2.21 per shares on revenues of $18.1-18.5 billion.
Currently THC is in a bear market with a -42% drop from its July highs. The oversold bounce from round-number support at $35.00 just failed a couple of weeks ago. Now THC is poised to breakdown below $35.00.
The intraday low today was $34.92. Tonight we are suggesting a trigger to launch bearish positions at $34.75. Plan on exiting prior to THC's earnings report on November 2nd.
Trigger @ $34.75
- Suggested Positions -
Short THC stock @ $34.75
- (or for more adventurous traders, try this option) -
Buy the NOV $35 PUT (THC151120P35) current ask $2.10
option price is a current quote and not a suggested entry price.
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.
Option Format: symbol-year-month-day-call-strike