During Thursday's Mad Money program, Jim Cramer wondered how investors should evaluate the health of our nation's largest health insurer? Cramer said there was a lot to like about UnitedHealth Group's (UNH) earnings this quarter, but the outlook is still murky.
The company reported strong results that included a nine-cents-a-share revenue beat. The UNH told investors that while claims related to Covid-19 spiked, claims for practically everything else have plummeted as patients postpone procedures.
Cramer said he was impressed that UnitedHealth didn't suspend its earnings guidance, instead choosing to maintain the status quo.
With shares now pulling, Cramer said he'd still be a buyer on UNH on any continued weakness.
Let's check out the charts to see what might be a good trade location.
In this daily bar chart of UNH, below, we can see that prices retested the February peak this month. Prices pulled back from this first test and trading volume declined. A pullback on light volume is typically a good sign for chart readers as it suggests that traders are largely keeping their positions as opposed to liquidating or selling them.
UNH is still above the bottoming 50-day moving average line and above the rising 200-day moving average line.
The daily On-Balance-Volume (OBV) line has been strengthening since late March and tells us that buyers of UNH have been more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator has narrowed slightly but it remains in bullish territory above the zero line.
In this weekly Japanese candlestick chart of UNH, below, we see a situation that needs further monitoring. The current weekly candle pattern is a doji where the open and close are the same or nearly the same. This pattern tells us that buyers and sellers are in balance and the candle pattern this coming week could tip the balance.
A bullish candle next week would mean the uptrend is refreshed but a bearish candle could be confirmation of a top reversal. Meanwhile, the western technicals are bullish with a rising OBV line and an improving MACD oscillator.
In this Point and Figure chart of UNH, below, we can see that a dip to the $271 area could be bought and a trade at $305.90 would be a breakout. The $354 area is the next price objective.
Bottom line strategy: Overall the charts and indicators of UNH are constructive. Traders should look to go long or add to longs in the $271 area if available.