The bulls are off and running today despite weaker PMI (Purchasing Managers’ Index) numbers from across the pond. The Eurozone countries that share the euro contracted at a faster-than-expected rate in March as the index fell to a 3-month low of 46.8, down from 47.9 in February. Anything under 50 shows contraction but the overseas markets ended their sessions higher as the market here at home continues to push new highs.
Much of the strength is coming from the Healthcare sector as it is rallying on news that Medicare reimbursements are going up. There had been some worry that Medicare and Medicaid would cut payback rates so the news was a big relief for companies like Aetna (AET, $54.55, up $2.17), Cigna (CI, $65.41, up $2.50), and Humana (HUM, $80.27, up $5.25). The big gains in the stocks have been a windfall for option traders as the near-term call options are zooming in these names.
The Humana April 80 calls (HUM130420C00080000, $2.25, up $1.55) are up 220% and have traded as high as $3.50. Yesterday close on these call options was 70 cents and the surge to $3.50 represented a 400% gain. Wow. We like to play WellPoint (WLP, $69.72, up $2.28) from time to time and we did really well with some call options last year as one of our plays returned 193% in 9 days back in August.
These stocks have come off their highs for the day but keep an eye on the sector as there could be more upside ahead.
As far as the market, the Dow is pushing new highs and our extended fluff target with today’s 97-point pop and is at 14,669. The S&P 500 has come within 2 points of its all-time intraday high of 1,575 and is at 1,572, up 10 points. The Nasdaq is higher by 23 points to 3,262.
We have been building our Watch List this week as we finish winding down our remaining April plays and look ahead to possible May and June trades. There are a number of trades on our List that are getting nice some nice pin action today but we have to be careful not to chase. However, there is a short-term trade we want to play from now until Friday’s close so let’s get on it.
Subscribers, check the Members Area for the updates and stay locked-and-loaded in case we see something else we like. We may also have a few updates for our Weekly Wrap trades either today or tomorrow.