Investors Bullish on CVS Health Stock Despite 7.2% Drop due to Medicare Advantage Payment Rate Disappointment

Potential for a CVS Health Stock Rebound

Yesterday, the decline in health insurance stocks, caused by the final Medicare Advantage payment rates coming in below expectations, had a ripple effect on CVS Health Corp (NYSE:CVS) stock. The stock saw a significant 7.2% drop, marking its largest daily percentage loss since August. However, despite a modest recovery today with shares up 0.7% at $74.37, the impact of the news is still being felt.

For investors considering buying the dip, recent indicators suggest that CVS Health stock is within one standard deviation of its 200-day moving average. Historically, this trendline has bullish implications. Schaeffer’s Senior Quantitative Analyst Rocky White noted that the equity has seen two similar signals in the past three years, with the stock higher one month later each time, averaging a 3% gain.

Additionally, CVS Health stock’s 14-day relative strength index (RSI) of 29.4 indicates that it is in “oversold” territory, which could point to a short-term bounce. Prior to yesterday’s drop, the stock had been on an upward trajectory with only three daily losses since March 14. Year-to-date, CVS is down 5.7%, but these recent indicators suggest a potential rebound in the near future

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