Editor's Note:
I mentioned this stock in my editor's note over the weekend. The relative strength today is encouraging. I am promoting CVS to an active candidate earlier than expected.



CVS Caremark Corp. - CVS - close: 31.23 change: +0.29

Stop Loss: 30.45
Target(s): 33.50, 34.90
Current Option Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Company Description:
CVS Caremark is the largest pharmacy health care provider in the United States. Through our integrated offerings across the entire spectrum of pharmacy care, we are uniquely positioned to provide greater access to engage plan members in behaviors that improve their health, and to lower overall health care costs for health plans, plan sponsors and their members. CVS Caremark is a market leader in mail order pharmacy, retail pharmacy, specialty pharmacy, and retail clinics, and is a leading provider of Medicare Part D Prescription Drug Plans. As one of the country's largest pharmacy benefits managers (PBMs), we provide access to a network of more than 64,000 pharmacies, including over 7,100 CVS/pharmacy® stores that provide unparalleled service and capabilities. Our clinical expertise includes one of the industry's most comprehensive disease management programs. (source: company press release or website)

Why We Like It:
I mentioned CVS as a bullish candidate in my editor's note over the weekend. Shares have been building a bull-flag pattern for weeks now and CVS looks poised to breakout from this pattern. The relative strength today is encouraging. The stock has short-term resistance at $31.75. I'm suggesting a trigger to buy the stock (or calls) at $31.80. CVS will probably have additional resistance at its 200-dma (currently near $32.40) but our first target is $33.50. Our second, longer-term target is $34.90.


Suggested Position: stock @ 31.80
- or
BUY the 2011 January $33.00 call (symbol: CVS1122A33)

Annotated chart:

Entry on November xx at $xx.xx
Earnings Date 02/08/11 (unconfirmed)
Average Daily Volume: 10.1 million
Listed on November 8th, 2010