Taking the Express Route to Profits in the Healthcare Sector

Tom Gentile

A lot of Baby Boomers are now running smack dab into their retirement.

An aging population coupled with the rising cost of healthcare and prescription drugs is a potent brew for profiting in the healthcare sector.
And it's no wonder that this company is in the spotlight with long-term analysts.

Let's find out how to take the "Profit Express" right now…

A Healthcare Sector Giant You Need to Know

Perhaps you have never heard of Express Scripts Holding Co. (Nasdaq: ESRX), but you need to. ESRX is a pharmacy management company in the United States and Canada with over $102.4 billion in revenue. It's a huge player in the healthcare sector and is always in the spotlight with long-term analysts.

But is it ripe for a shorter-term technical trade?

I certainly think so. I love ESRX stock for two reasons.

Let's take them one at a time and use our charts to guide the way.

In the chart below, ESRX continues to show the higher-low, higher-high approach to its rising price. The first quarter of 2015 shows stock price lows at $82, and highs at $89.50. Meanwhile, second-quarter lows came in at $83.75, and highs pushed $91.

Recently, ESRX pulled back to $85 before once again heading north to a recent stock price of $88. Just some quick calculations show the stock's lows getting higher by $1.75, while the most recent highs were $1.50. The next swing high should take the stock to $92.50, based on this analysis.

The second thing I love about this stock is that moving averages are moving in the right direction, as you can see in my next chart below.

Now it's one thing to have a moving average below the price of a rising stock like ESRX, but it's something else to have two moving averages help dictate buy and sell points on a stock.

Moving average crossovers do precisely that. They give traders an opportunity to buy rising stocks on pullbacks.

I love the 10- and 30-day moving averages on stocks that have the higher lows and higher highs on their charts. What I concentrate on is when these moving averages cross over each other.

When the 10-day moving average crosses above the 30-day moving average, this is a very bullish signal, especially to a stock like ESRX, which is trending higher. On the contrary, when the 10-day moving average crosses below the 30-day moving average, this would constitute a sell.

As you can see from the chart above, ESRX is now telling us that it's time to go higher…

Tom Gentile

About the Author

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Tom Gentile is widely known as America's #1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Now, he's diving into the biggest market in the world - one that almost no one has heard of before.

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