Another hated stock, another win

What a few weeks can make for changing traders sentiment! Just 3 weeks ago, Teva was not a stock that many people would even look at. It was extremely hated then but I wasarguing that it could be a good turnaround stock for the year. Well, lucky me for the good timing and similarly to my GE contrarian call, TEVA has started a great short-term up-run for over 15% gain in 3 weeks. It is nothing shabby for such a gain within weeks by simply buying the stock but for me with options, it has tripled already for my money. At a price over $21 now, I think TEVA still has much more room to go up and I won’t be surprised to see it challenge $30 in 2018. After all it is extremely cheap by all means for a company that is still quite profitable. Having said that, Teva is bumping up against its resistance and is very overbought short term with clear negative divergence in many technical indicators. A pause or even retreat from this level is quite possible near term. For this reason, I’m taking off my nice option gains for now and I will be happy to get in again if it indeed comes down again in the weeks ahead. If you are holding stock for long term, there is no need to worry for the possible short term weakness.