Initially UnitedHealth stock rallied after the company reported earnings of $3.73 per share and revenue of $60.13 billion. Both metrics beat expectations as UnitedHealth stock opened north of $238 on Tuesday and looked like it could turn higher.
Investors didn't hesitate to sell into that initial rally, though, with UnitedHealth stock down by 4% on the day as the stock made new 52-week lows in the session. Shares closed at $220.96.
"As you can tell from the reported results, UnitedHealth Group delivered a clean quarter with few flaws. But as you can tell by the stock's performance today, the market doesn't care," the AAP team wrote on Tuesday. "While management did its best to calm the fears of investors...worries about 2020 and the political headline risk have kept this stock (and the group) in the house of pain."
Trading UnitedHealth Stock
It's not hard to spot the downtrend when looking at UnitedHealth stock. Shares had been relatively rangebound since September between $235 and $270, while downtrend resistance (blue line) didn't really take hold until February.
From late-January to late-February, UNH stock was grinding up against $270, the upper area of its range. However, failing to push higher, UnitedHealth put in its first lower higher after its fourth-quarter rally to $285.
Even that wasn't the warning sign to heed.
Notice how the stock pulled back to its 200-day moving average after failing at $270. It then failed its retest of $270, and fell through the 200-day moving average. Finally, on the stock's rally in mid-March, UnitedHealth stock rallied to the 200-day and failed to reclaim this level.
This indicated a huge sentiment shift and it showed in dramatic fashion on the charts. Incidentally, this notched another lower high in the name.
Tuesday's action is adding to the bulls' dilemma.
Rallying to prior range support at $235 and failing to hold this level really deals a blow to the bulls' case. The post-earnings move formed a bearish engulfing candle over the prior two sessions and the longer it stays below $235, the worse the technical outlook becomes. Watch this level. If UnitedHealth stock can reclaim this level, it can start repairing some of this action. Below warrants plenty of caution, though.