CVS Health (CVS) shares were rising Wednesday, up about 5% after better-than-expected earnings.

Solid quarterly results were certainly a positive, but it may also help that Walgreens (WBA) is potentially in talks for a private-equity offer. That could suggest that both entities are undervalued.

While Walgreens is rallying on the reports, it's not so far off its lows. That's unlike CVS stock, which has been rallying for several months now after bottoming out near $50 a share.

Now though the stock faces a very key resistance mark. If it's able to hurdle it another 10% rally could be in the cards. If it stands pat as resistance though, bulls will need to be cognizant and to where shares could fall.

Given the results and the recent rally in CVS Health, it makes for a worthwhile selection as Real Money's Stock of the Day.

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Trading CVS Health Stock

Daily chart of CVS Health stock.
Daily chart of CVS Health stock.

A look at the daily chart above shows very solid price action for the bulls. CVS stock gapped over channel resistance (blue line), as well as the 38.2% retracement. In this sense, there's not much in the way of resistance until the 23.6% retracement at $72.63.

The only other consideration here would be the relative strength index (RSI), which measures how overbought or oversold a stock is (blue circle). It's not an indicator to use exclusively - as in, ignoring other developments and price action - but it can be useful in conjunction with other metrics.

From here, it wouldn't be unhealthy to see a rally up to ~$73.50 and then a pullback down to the $68 to $70 area. There, bulls can find out if new support comes into play near former resistance, while allowing the RSI to unwind a bit.

Weekly chart of CVS stock.
Weekly chart of CVS stock.

While the daily charts look pretty clear, the weekly chart reveals a stout level of resistance looming nearby.

In late 2016, CVS Health stock broke below the 200-week moving average. When shares rebounded, the 200-week acted as resistance and has technically played this role for three years now.

That's a long time and makes this mark a very significant level. Like the daily chart, the weekly chart also has an elevated RSI reading too.

Bulls need to clear the 200-week moving average at $71. If the stock does that, it opens up the door to $73.50, then $77.50 to $78, up about 10%. On the downside, bulls will want to see the $68 to $70 area hold as support. Below and the 100-week moving average down near $63.50 will become an important support level.

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.