Reboot of Obamacare Energizes Health Insurers

One of the issues that favored the Democrats in controlling the House over the next two years was healthcare and the "pre-existing conditions" debate. This factor caused the spike in share prices for four healthcare insurers to new all-time highs as both sides of the aisle just may be willing to negotiate a reboot of Obamacare.

Medicaid expansion is set to grow by 500,000 after voters in three red states elected Democratic governors. Obamacare supporters cite victories that reprimanded Republicans for the failure to repeal and replace the Affordable Care Act. It remains to be seen whether healthcare can become an issue that brings Democrats and Republicans to the bipartisan table.

Each of the four health insurers charted below reported their quarterly earnings between Oct. 16 and Nov. 7 and kept alive winning streaks of eight to 20 quarters.

Here's the healthcare insurers scorecard

The weekly chart for Aetna Inc. (AET) 

The weekly chart for Aetna is neutral, with the stock above its five-week modified moving average of $201.10 and well above its 200-week simple moving average at $138.60, which is also the "reversion to the mean." The 12 x 3 x 3 weekly slow stochastic reading is projected to slip to 62.40 this week, down from 65.50 on Nov. 2.

Given this chart and analysis, my trading strategy is to buy Aetna shares on weakness to annual value level of $161.49 and reduce holdings on strength to my quarterly risky level at $218.10. My semiannual and monthly pivots are $201.09 and $199.03, respectively.

The weekly chart for Anthem, Inc. (ANTM)

The weekly chart for Anthem is neutral, with the stock above its five-week modified moving average of $273.00 and well above its 200-week simple moving average at $176.36, which is also the "reversion to the mean." The 12 x 3 x 3 weekly slow stochastic reading is projected to slip to 65.82 this week, down from 72.38 on Nov. 2.

Given this chart and analysis, traders should buy Anthem shares on weakness to my annual value level of $194.00 and reduce holdings on strength to my quarterly risky level at $300.91. My monthly and semiannual pivots are $266.41 and $246.31, respectively.

The weekly chart for Humana Inc. (HUM)

The weekly chart for Humana is neutral, with the stock above its five-week modified moving average of $328.56 and well above its 200-week simple moving average at $219.83, which is also the "reversion to the mean." The 12 x 3 x 3 weekly slow stochastic reading is projected to slip to 44.37 this week, down from 49.04 on Nov. 2.  

Given this chart and analysis, I suggest buying Humana shares on weakness to my annual value level of $253.11 and reducing holdings on strength to my quarterly risky level at $353.33, which was tested after the election on Nov. 7. The stock is between my semiannual and monthly pivots at $312.56 and $345.60, respectively.

The weekly chart for UnitedHealth Group Incorporated (UNH)

The weekly chart for UnitedHealth is neutral, with the stock above its five-week modified moving average of $265.32 and well above its 200-week simple moving average at $168.99, which is also the "reversion to the mean." The 12 x 3 x 3 weekly slow stochastic reading is projected to slip to 55.36 this week, down from 56.58 on Nov. 2.

Given this chart and analysis, traders should buy shares of UnitedHealth on weakness to my annual value level of $199.75 and reduce holdings on strength to my quarterly risky level at $286.04. The stock is above my monthly and semiannual pivots at $273.32 and $160.13, respectively.

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.