Healthcare giant UnitedHealth Group (UNH) is scheduled to report earnings on Friday. In our September 30 review of UNH we wrote that "UNH has bounced off its 40-week moving average line several times in the past three years but this time could be different. Stay alert and raise your sell stops."
In this daily bar chart of UNH, below, we can see that UNH has been trading below the 200-day moving average (a.k.a. the 40-week moving average) in recent days. Trading volume does not show a meaningful increase to suggest that technically oriented traders are using this weakness as a buying opportunity.
The daily On-Balance-Volume (OBV) line shows weakness from early September. The Moving Average Convergence Divergence (MACD) oscillator is bearish.
In this weekly Japanese candlestick chart of UNH, below, we can see that UNH has slipped below the rising 40-week moving average line. It has happened before and prices have rallied to a new high but this time could be different in that a large upper shadow can be seen in late September suggesting a strong rejection of the highs.
Also, I would note that the Healthcare ETF ( XLV) is the weakest I have seen in a while.
The weekly OBV line is pointed lower and the MACD oscillator is in a take profit sell mode.
In this daily Point and Figure chart of UNH, below, we can see a downside price target in the $463 area.
In this weekly Point and Figure chart of UNH, below, we used a five box reversal filter and can see a price target in the $422 area.
Bottom line strategy: I have no special knowledge of what UNH will be telling shareholders Friday about their quarterly results but the charts remain weak-looking and I would avoid the long side of UNH for now.
