The centers for Medicare and Medicaid services has released their proposal to increase hospital reimbursement by 80 basis points by FY14. This is better than most expectations. There are two hospital stocks in our portfolio THC and VHS.
THC is long with an average price of $20.40. Profits have been taken as high at $46.87. VHS is a relatively recent position long from about $14.55.
The new buy zone for VHS is $12. to $14.75. Target zone is $18 to $20. No stops since the position is in the process of being accumulated, however for those who must use stops, the stop zone is $9.23 to $9.38.
The target zone on THC is $48. to $52. The buy zone is $32.28 to $36.36. Since profits have been taken on most of the position, it is best to slowly accumulate without stops, but for those who must use stops the stop zone is $24. to $27.
These stocks are highly volatile, therefore it is extremely important to follow ZYX Trade Management Guidelines and build positions slowly.
What To Do Now?
Those holding THC may continue to hold and consider adding near the low-end of the buy zone.
Those not in THC may consider starting to accumulate in small tranches near the top of the buy zone.
Those holding VHS may continue to hold and consider adding to the position cautiously in small increments in the lower half of the buy zone.
Those not in VHS may consider starting a 10% to 20% tranche now as VHS is in the buy zone.
Conservative investors may want to wait for a dip closer to $14 on VHS.
