Name That Chart in Health Insurance
- Posted by Greg Harmon
- on April 4th, 2012
Have You Seen This Chart?
This one chart can be used to describe an entire sector of stocks. The Health Insurance stock charts all look like this. It is what happens when news is driving a sector. You would be hard pressed to pick the right one out of a line up without the name, and actual price. This price action shows a bull flag after a strong move higher last Thursday, consolidating the gains. The technical read would be to buy it on a break over the top of the flag and look for a 3 box move higher. On a move below the flag you would look for a retracement to the previous consolidation, a possible short trade. So are they really all the same? And if not how can you tell the difference between them? Here are 4 to give a feel.
Unitedhealthcare, $UNH, has potential to 64 on the upside, or over 8% and downside support at 56. The Relative Strength Index (RSI) is strongly bullish and working off being overbought with a Moving Average Convergence Divergence (MACD) indicator that is positive and rising. Not bad.
Aetna, $AET, has potential to 54 or 8% higher and downside support at 47.50 and 46. The RSI is strongly bullish and working off being overbought with a MACD that is positive but fading a bit. Similar upside, with a bit more downside risk. Next.
Wellpoint Health Networks, $WLP
Wellpoint Health Networks, $WLP, has potential to 80 or 11% higher and downside support at 72, 70, and 68. The RSI is strongly bullish and working off being overbought with a MACD that is positive but fading a bit. More upside and better downside protection. Now we are talking.
Cigna, $CI, has potential to 55 or 12% higher and downside support at 47 and 45.30. The RSI is strongly bullish and working off being overbought with a MACD that is positive but fading a bit. Even better upside, with a bit more downside risk.
So are they really all the same? The potential for 11 or 12% returns higher on a flag break with even less downside risk in Wellpoint and Cigna make them clear winners despite the charts all looking the same. Did you guess which one the chart at the top came from?
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Top Trade Ideas for the Week of September 2, 2014: The Rest
- Top Trade Ideas for the Week of September 2, 2014: The Rest Premium
- Top Trade Ideas for the Week of September 2, 2014: The Best
- Should Trading and Investing Really Not be Fun?
- SPY Trends and Influencers: Monthly Edition August into September 2014
- SPY Trends and Influencers August 30, 2014
- Macro Month in Review/Preview August into September 2014
- Macro Week in Review/Preview August 29, 2014
- Premium Earnings 8-29-14
- Stocks and Bonds Rising Together – Its Not So Strange