By: Scott Redler
The news that the public option would no longer be a component of a national health care bill ignited a powerful move in the health insurance sector yesterday. Multiple stocks in the sector closed at 52 week highs with several sitting just below those levels. We like focusing on stocks with “little to the left”–minimal resistance in the in the recent past–for trade opportunities. UNH, WLP, CI, HUM, AET, HNT and WCG are all stocks for traders to focus on in the coming days and weeks. The powerful move yesterday might take a day or two to digest, yet these stocks deserve close attention. When we have a fundamental catalyst ignite a technical move, we can confidently trade a strong chart setup.
I wanted to focus attention on one play in particular, UnitedHealth Group (UNH). The stock built a nice base in the $25 area over the past few months and exploded through $30 on yesterday’s news, closing at 52-week highs. For the medium-term swing trader, price looks headed to the $35 area and for the longer-term macro trader we can see a run up to the gap area at $40. We will look to establish a position upon price holding and confirming the $30 breakout level. Be patient and allow the stock to digest yesterday’s strong move.
