3 Healthcare Stocks for the Technical Trader

UnitedHealth Group Inc (NYSE:UNH), Boston Scientific Corporation (NYSE:BSX), and Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) are healthcare stocks that all recently flashed a historically significant signal

Sep 11, 2015 at 11:49 AM
facebook twitter linkedin

Healthcare performed well on Thursday, coming in as one of the top sectors, with the iShares Dow Jones U.S. Healthcare ETF (NYSEARCA:IYH) gaining 0.9%. Keeping this in mind, we were able to locate three stocks within the sector that technical traders may want to pay attention to in the short term. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. 
First up is blue chip UnitedHealth Group Inc (NYSE:UNH). The shares are off 0.3% today at $116.42, but still hold a 15.2% year-to-date lead. What's more, the stock recently pulled back to its 200-day moving average, a historically bullish trendline. UNH has hit this level four times in the past three years, posting a positive 21-day return each time. The stock's average return following this signal is 9.6%. Such a move this time around would have the shares in all-time-high territory. 

Adding to UnitedHealth Group Inc's bullish case is a recent influx of bearish betting. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), UNH's 10-day put/call volume ratio sits at 1.28, higher than three-fourths of all readings from the past year. Taking a contrarian approach, a shift in trader sentiment could help the shares. 

Boston Scientific Corporation (NYSE:BSX) also recently flashed a historically bullish signal by pulling back to its 200-day moving average. The shares have hit this trendline five previous times in the past three years, boasting an average 21-day gain of 2.4%. Looking at a 21-day timeline, BSX has ended positive following such signals three-fourths of the time. 

Even though Boston Scientific Corporation is following the broader market lower today at $16.70, the shares have outperformed more generally -- up 26% year-to-date. That hasn't been enough to repel short sellers, though. During the two most recent reporting periods, short interest shot up 12.8%. If BSX responds to this technical signal as it has in the past, some of these bears could make quick exits, which could act as a tailwind for the shares. 

Finally, there's Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA)​. The stock recently flash a significant signal of its own -- except of the bearish variety. The shares are hovering near their 320-day moving average, and the last time they touched this trendline, the equity dropped 4.1% over the following five days. 

ARIA is sliding today, giving back 2.8% to trade at $7.81. However, the stock has blown past the S&P 500 Index (SPX) by more than 17 percentage points during the past 20 sessions -- despite failed M&A negotiations -- leading to a fresh round of bullish betting. Ariad Pharmaceuticals, Inc.'s 10-day ISE/CBOE/PHLX call/put volume ratio stands at a top-heavy 10.08. 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

Schaeffer's Investment Research Stock Pick Report


Special Offers from Schaeffer's Trading Partners