A Bailout Plan at the Ready

When we wrote about the nauseating rise in healthcare costs earlier this month, I told you about one investment that should actually benefit from this dire situation: Omega Healthcare Investors (NYSE: OHI)… a real estate investment trust (REIT) that rents space to low-cost healthcare providers, like skilled nursing facilities.

Today, I’m writing to let you know I still love the investment’s business model. But, you need to have a bailout plan because nearly all investments, in every sector and asset class, are selling off following Wednesday’s Federal Open Market Committee (FOMC) meeting.

Here’s an updated chart of OHI:

See larger image

Shortly after Omega dipped into the buy zone, between $30 and $33, it turned higher, gaining 8% at one point.

Then…

Dear Ben spooked the market.

That sent OHI down to the bottom of this buy zone, with no assurances that prices will move higher until the market’s near-term fears are soothed.

That means you need to have a plan for cutting losses short if yesterday’s rout continues. A stop loss order between $27.50 and $28 is a good idea. This level is a mild zone of support, based on prior price action. And, it’s just below the 61.8% Fibonacci retracement level. Typically, once this level is broken to the downside, the probability of higher prices is rather low.

Omega’s business is still strong. But right now, its share price isn’t. Don’t try to catch this falling knife.

For Boom & Bust subscribers who followed my initial recommendation… hang tight. We still have open gains of 50%. I’m watching this position closely and will send out a trade alert if/when it’s time to act.

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Categories: Markets

About Author

Adam O'Dell has one purpose in mind: to find and bring to subscribers investment opportunities that return the maximum profit with the minimum risk. Adam has worked as a Prop Trader for a spot Forex firm. While there, he learned the fundamentals of trading in the world’s largest market. He excelled at trading the volatile currency markets by seeking out low-risk entry points for trades with high profit potential. An MBA graduate and Affiliate Member of the Market Technicians Association, Adam is a lifelong student of the markets. He is editor of our hugely successful trading service, Cycle 9 Alert.