CVS Chart – June 16, 2009

I charted CVS Caremark Corp (NYSE:CVS) at 12:38 on June 16th, 2009 while it was trading at $29.92.

• The trend line of higher lows is set to converge with the trend line of lower highs soon - This is setting up something close to a symmetrical wedge
• Previous recent lows for CVS show potential support just under $29.00
• CVS broke below its 50 day moving average last week
• The 100 and 200 day moving averages offer potential support just below the current price and again in line with the previous lows
• Williams %R is neutral for CVS for the 14 and 28 day indicators
• Volume has been below average recently

Opinion – I traded CVS options using a bullish vertical put spread yesterday. I think the wedge drawn above is going to trigger a bull run soon at best and at worst CVS will come back down to retest its previous low near $29.00 and then rally. The break in the 50 day moving averages caused me to hedge my position along with the 10 and 20 day averages (not shown) breaking too.  I expect the 100 and 200 day moving averages to cross soon as a bullish indicator and help lift CVS further.