What you need to know
- Since the death of the UnitedHealthcare CEO in New York City, on December 4, UnitedHealth’s shares are down.
- Stocks found significant interest in buying at the 200-week moving median in the Wednesday trading session. The indicator is one that has shown strong support twice since 2020’s pandemic bottom.
- Investors should watch crucial support levels on UnitedHealth's chart around $460 and $430, while also monitoring key resistance levels near $550 and $610.
Since the death of the UnitedHealthcare CEO in New York City, on December 4, UnitedHealth Group shares (UNH) have declined.
In addition to recent Washington pressure on pharmacy benefit managers, third-party administrators who oversee drug programs for major insurers such as UnitedHealth, the stock decline has been exacerbated by the fall in prices.
This week, the federal budget bill included several PBM-related proposals, including those focusing on rebates and transparency in reporting. Analysts say that the legislation gives PBMs plenty of time to change their business models, which will have a minimal effect on insurers’ profits.
UnitedHealth fell by 2.1% Thursday, to $489.25. The stock is down 20 percent since the 4th of December. Stocks have fallen 7% in value since January.
We will examine the UnitedHealth weekly chart in order to determine key levels of price that are worth monitoring.
The Moving Average of 200 Weeks Provides Support for Historical Data
UnitedHealth’s shares, which had set a record-high in November early this year, traded sideways over several weeks until they began their dramatic decline earlier this month. Volume was at its highest since the pandemic low of 2020.
In Wednesday’s session, there was a lot of buying activity around the moving average 200 weeks. Interestingly, the last two times the price has closed below this closely watched indicator on the weekly timeframe—in March 2020 and April this year—the shares rebounded 41% and 19%, respectively, over the next five weeks.
Let’s look at the UnitedHealth chart and identify some of the key support levels and resistance levels that investors might be watching.
Keep an eye on the Support Levels Crucial
A fall of around $460 could be triggered by selling below the 200 week MA. Investors could look to enter at this point near a line that links the November 2021 high with multiple troughs in the chart from January 2022 through April of this year.
If the price falls below $430 then it could return to lower support. This is a place on the chart that buyers can accumulate stocks around the prominent swing highs formed in August and May 2021.
The Key Levels of Resistance to Monitor
Investors should first monitor the response of the stock to $550. Located just above the fifty-week MA at the moment, this area could offer resistance in the vicinity of a horizontal line connecting a number of price points that are similar on the chart, from April 2020 to December 2019.
Finaly, a bullish reverse could drive the price up to about $610. Investors may be looking to lock-in profits after purchasing shares in lower prices. This is usually near the period of consolidation that occurs just below a stock’s previous record close.
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The author of this article does not currently own any securities listed above.
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