Catamaran Corp (NASDAQ: CTRX)

Catamaran Corporation provides pharmacy benefit management (PBM) services and healthcare information technology (HCIT) solutions to the healthcare benefits management industry in North America. The company operates in two segments: PBM and HCIT. Its PBM services include electronic point-of-sale pharmacy claims management, retail pharmacy network management, mail and specialty pharmacy claims management, Medicare Part D services, benefit design consultation, preferred drug management programs, drug review and analysis, consulting services, data access, and reporting and information analysis. The company offers RxCLAIM, an online transaction processing system to provide online adjudication of third-party prescription drug claims at the point of service, as well as payment and billing support and real-time functionality for updating benefit, price, member, provider, and drug details. It also provides RxBUILDER, a Web-based interface for formulary creation and maintenance; RxPORTAL, which allows customers to interact with the patieny’s formulary and drug history; and RxAUTH, a prior authorization (PA) management solution for automating PA process.

Please take a look at the 1-year chart of CTRX (Catamaran Corporation) below with my added notations:

1-year chart of CTRX (Catamaran Corporation)

CTRX has been holding a very important level of support at $46 (lavender) for almost the entire duration of the 1-year chart, and you can see that $46 had also been a resistance prior to that back in August. No matter what the market has or has not done since September, the stock has held that $46 level. CTRX is approaching $46 again and that should provide another bounce higher, but if the overall market sells-off, CTRX could break that support.

The Tale of the Tape: CTRX has a very strong level of support at $46. A trader could enter a long position at $46 with a stop placed under the level. If the stock were to break below the support, a short position would be recommended instead.

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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