Buy This Blue Chip While It's Still On Sale, Says Signal

UNH stock could stage a rebound, if history is any indicator

Digital Content Manager
Mar 6, 2019 at 1:43 PM
facebook X logo linkedin


UnitedHealth Group Inc (NYSE:UNH) stock has taken a beating, after last week's Medicare-for-All bill was introduced by House Democrats -- wreaking havoc on the health insurers and helping to drag down the Dow on Monday. However, it appears the stock has found some support in the $235 area, which is around where it bottomed in late December and early January. What's more, UNH just flashed a historically bullish signal on the charts, suggesting the blue chip could be a bargain right now. 

Specifically, the stock just came within one standard deviation of it's 80-week moving average after a lengthy period above the trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, this signal has appeared 11 times in the past 15 years. UNH stock averaged a 9% gain three months later, and was higher 80% of the time after these signals. From its current perch at $239.65, a move of similar magnitude would put it at $261.22 -- right around where UNH sat prior to the Medicare-bill plunge. 

UNH Chart March 6

UNH stock's sell-off hasn't deterred analysts, who are still resoundingly optimistic on the insurance concern. Fourteen of the 17 analysts following the stock give it a "strong buy" rating, only one says "hold," and there isn't a single "sell" to be seen. What's more, the consensus 12-month target price of $307.17 is a 29% premium to current levels. 

Options traders have remained bullish on the equity, too. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) 1.87 calls have been bought to open for every put in the past 10 days. This ratio sits in the 83rd percentile of its annual range, meaning there's been a healthier-than-usual appetite for bullish bets of late.

Looking at today's trading, it appears to be business as usual, with calls still slightly outnumbering puts. There does appear to be some activity on both sides of the weekly 3/8 series, though, with 237.50- and 235-strike puts and 240-strike calls being bought to open. 

That being said, it might be a good time to speculate on more upside for UNH with options. The equity's Schaeffer's Volatility Index (SVI) of 23% stands in the 38th percentile of its annual range. This means that near-term options are pricing in relatively modest volatility expectations right now. 

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI