In my July 14 review of UnitedHealth Group (UNH) I wrote, "Has UNH made a low? Probably. Is UNH a buy here? I am not so sure. I need to see more evidence. Stay tuned."
Let's check out the charts again.
In the daily bar chart of UNH, below, I can see that share prices stalled in late July and early August before turning lower again. They are now back below the declining 50-day moving average line and the declining 200-day moving average line.
The On-Balance-Volume (OBV) line shows weakness from late July and suggests that sellers of UNH have been more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator turned bearish again in late August.
In the weekly Japanese candlestick chart of UNH, below, I see a bearish picture. Notice all the upper shadows in July and August as traders rejected the highs? UNH trades below the declining 40-week moving average line.
The weekly OBV line has been drifting lower the past year. The MACD oscillator has crossed to the downside from below the zero line -- a fresh outright sell signal.
In this daily Point and Figure chart of UNH, below, I can see a potential downside price target in the $430 area.
In this weekly Point and Figure chart of UNH, below, I can see the same $430 price target as the daily chart above. A trade at $430 looks like it could precipitate further declines.
Bottom-line strategy: The charts of UNH look vulnerable to further weakness. Avoid the long side of UNH.
