Why I’m Waiting on Teva
Teva caught my eye for something it barely did. During last Thursday’s selloff, its price hardly moved. By Tuesday’s close, though, it had already climbed far enough from its recent average that I wanted a better entry. It’s on my watchlist for Wednesday night in Singapore. Before I’d consider an order, I’d like to see who shows up when the stock gives a little ground.
Tuesday gave me a reason to keep looking. The inflation reading came in hot, Treasury yields jumped, and long bonds sold off. I would have expected that combination to leave a fairly broad dent in stocks. Yet the equal-weight S&P 500 finished flat. The main index lost a little ground, and both the S&P and the Nasdaq stayed inside Monday’s trading range. The Nasdaq had also tried twice to get past its 200-day average. I can see why buyers might have another go, but I’d like to see them carry an advance into the close on decent volume. Green futures leave that question open.
Looking back at Thursday helps me choose where to spend my time while I wait. Wayfair has pulled back toward support, a place where I’d usually take a closer look. But it fell sharply when the market came under pressure, and its momentum was still fading. If the indexes turn down again, the test for me is whether Wayfair can hold that area into the close. Teva gives me a different problem. It held up when I wanted it to, but earlier advances on its chart gave way to pullbacks toward the average. Those pullbacks give me a place to look again. If buyers step in there, I can reassess Teva with a clearer idea of what would change my mind.
I also wrote a note beside IQV. The chart interests me, but the gap between the bid and the ask on its options is wide. With two legs to price, I could give up a fair part of a favorable move getting into and out of a spread. That’s a practical reason to pass even if my reading of the chart proves right.
Tonight I’ll watch how much volume comes with any index rally and leave Teva room to come back to me.
Options involve substantial risk and may not be suitable for every investor.
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