Express Scripts Holding Company (NASDAQ: ESRX)

Express Scripts Holding Company provides a range of pharmacy benefit management (PBM) services in North America. It offers healthcare management and administration services on behalf of its clients, which include health maintenance organizations, health insurers, third-party administrators, employers, union-sponsored benefit plans, workers compensation plans, and government health programs. The company’s integrated PBM services comprise network claims processing, home delivery services, patient care and direct specialty and fertility home delivery to patients, benefit plan design consultation, drug utilization review, formulary management, drug data analysis services, distribution of injectable drugs to patients homes and physicians offices, bio-pharma services, and fulfillment of prescriptions to low-income patients through manufacturer-sponsored patient assistance programs. It is also involved in the distribution of pharmaceuticals and medical supplies to providers and clinics; international retail network pharmacy management; home delivery pharmacy services in Germany; scientific evidence to guide the use of medicines, and diabetes prescriptions and testing supplies; and healthcare administration and implementation of consumer-directed healthcare solutions.

To analyze Express’ stock for potential trading opportunities, please take a look at the 1-year chart of ESRX (Express Scripts Holding Company) below with my added notations:

1-year chart of ESRX (Express Scripts Holding Company)

ESRX has a key price level at $56 (navy). Not only can you see the $56 resistance from back in July and over the last (4) months, but that price has also acted as support on a couple of occasions. So, the $56 level is key to this stock. If you are bullish, you would want to buy the stock on a pullback to $56. However, if you are bearish, you might short ESRX on a break of the $56 support.

The Tale of the Tape: ESRX presents a couple of simple trading opportunities based on its key level of $56. A long position could be entered at the $56 support with a stop placed below that level, or a short play could be made on a break below $56 if that should happen.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT