UnitedHealth Group Is Still in a Healthy Uptrend

 | Aug 04, 2017 | 1:29 PM EDT
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In our last review of UnitedHealth Group (UNH) in mid-May, we concluded that, "We don't have signs of a major top developing, so I only anticipate some limited softness in the price of UNH. Nevertheless, traders might want to raise their sell stops just in case." Our comments included this -- on the Point and Figure chart back then: "Here support starts at $163.43 and extends down to $157.05. This chart also has a longer-term upside price target of $187."

Now that we can see that the pullback in UNH stopped above the support area we identified and that prices have exceeded our longer-term price target of $187, a fresh review is in order.

In this updated daily bar chart of UNH, above, we can see that prices have continued higher since mid-May, with prices above the rising 50-day moving average line and the rising 200-day line. The daily On-Balance-Volume (OBV) line has been rising since October, with a secondary move up from April. A rising OBV line is a sign that buyers of UNH are more aggressive than sellers. In the lower panel is the 12-day momentum study which is not showing a meaningful bearish divergence -- and thus no early warning of a possible reversal.

In this weekly bar chart of UNH, above, we can see that prices are above the rising 40-week moving average line, as they been since early 2016. The weekly OBV line is positive, as is the rising Moving Average Convergence Divergence oscillator.

In this Point and Figure chart of UNH, above, we can see the uptrend and the next upside price target of $210.

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.

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