After what started off as another dismal turn, the stock market rallied in the back half of last week to see the S&P 500 close up 1.4%. That sharp move higher midweek resulted in our being stopped out of the remaining portion of our iShares Barclays 20+ Year Treasury Bond ETF (TLT) February $130 calls. If you took advantage of my special alert last week to sell half of our TLT positon, you still booked a 36% winner in total even after we were stopped out — not bad at all considering that was accomplished in less than a week! It is even more impressive when we look at the market return last week or even year to date.

This just goes to show how volatile options can be when the market swings suddenly. That is why we’re going to focus on risk management as much as trading recommendations until the stock market is in calmer waters. You should continue to hold your FirstEnergy (FE) February $32 calls, as well as your PPL Corp. (PPL) February $35 calls, both of which are profitable at current levels. I continue to be frustrated with our Disney (DIS) position, and we will use any bounce to exit the position in the coming weeks.

Last week’s market rally relieved some of the January pain, but the net result is the index is down 6.7% so far in 2016. The reprieve was fueled in part by two things:

• Comments from European Central Bank President Mario Draghi suggesting perhaps another round of stimulative monetary policy could be in the cards. Any additional stimulus would serve only to strengthen the dollar.

• The move higher in oil prices reflects a smaller inventory build per the Energy Information Administration (EIA) weekly report. Peering into that EIA report, however, U.S. crude oil inventories are levels not seen in the last 80 years.

While oil prices will likely trend higher near-term as the East Coast digs out from #Blizzard2016, U.S. refineries are still clocking in at 90.6 percent capacity utilization and crude oil imports are up year over year. We also have to remember that Iran’s returning oil exports will soon ratchet up global supply against a slowing global economy. As such, I see a high probability that any short-term oil price bump is likely to be short-lived.

For those in doubt about the slowing speed of the U.S. economy, last week’s read on the Chicago Fed’s National Activity Index for December marked the fifth consecutive month of contracting activity in the United States. This week saw a horrific print in the January Texas Manufacturing Survey, which reported double-digit percentage drops in production, capacity utilization and new order growth. Granted, the energy economy is a big factor, but stepping back that report adds to the concern raised by the recent January Empire Manufacturing Report, which showed “that business activity declined for New York manufacturers at the fastest pace since the Great Recession.” Digging into that report we see new orders, shipments and overall business conditions fell sharply in January.

Adding more wood to that fire, the January Philly Fed Index not only remained in contraction territory, but also showed yet another drop in its six-month outlook indicator, which fell to 19.1 in December, down from 24.1 in December and 43.4 in November. Against that backdrop, it’s not hard to see how in its December earnings report last Friday, General Electric’s ([stock_quote symbol=”GE”]) industrials segment posted a 1% decline in both organic profit and revenue for the quarter.

Amid those latest economic gleanings, the velocity of earnings reports has started to pick up week over week, and so far I have to say I’ve seen more than a fair amount of disappointing, if not flat out weaker-than-expected outlooks from IBM ([stock_quote symbol=”IBM”]), Starbucks ([stock_quote symbol=”SBUX”]), Deutsche Bank ([stock_quote symbol=”DB”]), United Continental ([stock_quote symbol=”UAL”]), Intel ([stock_quote symbol=”INTC”]), Union Pacific ([stock_quote symbol=”UNP”]), American Express ([stock_quote symbol=”AXP”]) and others. That velocity will only accelerate further, given the number of companies that will be reporting their quarterly earnings the next two weeks.

While most people tend to focus on either growth or defensive positions, there are a few that sit at the intersection of growth and defensive plays. It’s no secret that our population is skewing older, and that is driving demand for a variety of healthcare services. Despite the tone of the economy, people will still seek out medical and other healthcare services. According to the Centers for Medicare & Medicaid Services, health spending is projected to grow at an average rate of 5.8% per year over the 2014-24 period. That’s pretty consistent growth and far better than we are likely to see in the domestic economy. If you get sick or injured, odds are you will still go to the doctor, take your medicine or recommended prescriptions and so on. I like that combination of demographic-fueled growth (it’s hard to slow let alone stop!) and inelastic demand. Put it together and it’s a great combination in a market environment such as this.

To me, CVS Health is a company that is transforming itself from “drug” store to more of a health company as it expands its geographic footprint. CVS continued to move more toward CVS Health as it entered into new clinical affiliations with four leading health care providers (John Muir Health, University of Chicago Medical Center, Novant Health and University of Michigan Health System). As part of this, CVS will provide prescription and visit information to those organizations, as well as clinical support, medication counseling, chronic disease monitoring and wellness programs at CVS/pharmacy stores and CVS MinuteClinics. CVS also stands to benefit from recently acquired businesses, including Target ([stock_quote symbol=”TGT”]) pharmacies and Omnicare. With the acquisition of Omnicare, CVS Health will significantly expand its ability to dispense prescriptions in assisted living and long-term care facilities, serving the senior patient population.

In light of this deal between Target and CVS, we are issuing a “Buy” rating on the CVS February $95 calls (CVS160219C00095000), which last traded at $1.92 and expire on Feb. 19. The strike date will allow investors to capture the benefit of the company’s December-quarter results, which will be published on Feb. 9. Given our attention to risk management in this volatile market, we are also recommending a stop loss at $1.65.