Can UnitedHealth Group and Cigna Stay Healthy?

Let's see if UNH and CI are what the doctor ordered.

During Wednesday's Mad Money program Jim Cramer told viewers that inevitably, the drug makers and health insurers become public enemy No. 1 during election season. But just like this year, those fears end up being overblown and buying into the health care slump is a winning trade.

That winning trade was on display today with shares of UnitedHealth Group (UNH)  and rival Cigna (CI)  , which soared in Wednesday trading. Cramer said these gains should continue as the analysts have yet to upgrade the group now that the fears have subsided.

Let's check out the charts of both. 

UnitedHealth

In this daily bar chart of UNH, below, we can see that prices made an upside breakout and gap. Trading volume was strong and prices are above the rising 50-day and rising 200-day moving averages.

The On-Balance-Volume (OBV) line is up from March and close to making a new high to confirm the new price highs. The Moving Average Convergence Divergence (MACD) oscillator looks like it is turning upward to a fresh outright buy signal. 

Cigna

In this daily bar chart of CI, below, we can see that prices have been surging higher all month. Prices gapped above the declining 200-day moving average line. The 50-day moving average line is turning upwards.

 

Trading volume has jumped lately and the OBV line is turning up after a lengthy decline. The MACD oscillator has turned positive. 

 

 

Bottom-Line Strategy

The price gaps and the heavy volume on UNH and CI tell us that traders and investors are anxious to buy. UNH has made a new high but CI has yet to break above its June and February highs. I feel more confident about buying the new highs of UNH -- this could be what the doctor ordered.

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