The stock price of UnitedHealth Group Inc. (UNH) got rocked a bit Tuesday after Amazon (AMZN) , Berkshire Hathaway (BRK.A) (BRK.B) and JPMorgan Chase (JPM) announced a new company to improve the health care of their employees. Many stocks in the health-care space dropped like a rock yesterday, but few details have been announced and the dust seems to be settling a bit today.
The last time we checked up on UNH was back in early August, and we said, "Bottom line: One of the key points of logic behind technical analysis is that prices trend. There certainly has been an uptrend in the share price of UNH, and our next price target is $210. A sell stop below $184 is probably appropriate now." UNH touched $250 the other day so clearly we need to check on the current charts and indicators for new levels.
In this daily bar chart of UNH, below, we can see that prices are still in an uptrend. UNH is still above the rising 50-day simple moving average line as well as the rising 200-day line. The volume of trading was heavier than average but the On-Balance-Volume (OBV) line has not weakened much. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside from well above the zero line. This crossover is a take profits sell signal and not and outright sell signal.
In this weekly bar chart of UNH, below, we can see that prices are above the rising 40-week moving average line. The weekly OBV line has not made a new high to confirm the price gains but it is also not from making a new high. The weekly MACD oscillator is in a bullish configuration but the two moving average that make up this indicator have narrowed slightly. A narrowing of these averages could become a signal but it is not a "done deal."
In this Point and Figure chart of UNH, below, we can see a potential longer-term price target of $323. A decline to $218.10 is probably needed to really weaken this chart.
Bottom line: UNH could see a sideways trading range between $230 and $250 or so in the short-run. Before long UNH is likely to resume its advance. I recommend using a close below $210 as a risk point.