A common campaign pledge we heard from the Republican camp heading into the mid-term elections was that they would fight to repeal Obama's comprehensive health care reform.

So what's happening with health care stocks now that the Republicans have taken over the House of Representatives? Will these volatile issues take off to multiyear highs, or will the uncertainty of the political process keep investors at bay in 2011 and beyond?

It's now widely assumed that President Obama's veto pen will keep the legislation intact through the 2012 elections. But House Republicans now have the power to deny funding to key provisions of the law. They can also tie up the bill's unresolved rules and entitlements in committees and panels that are sympathetic to the repeal arguments.

In addition, state courts will be processing dozens of lawsuits that attack various components of the comprehensive act. While their jurisdiction may be questionable, they also have the power to roadblock key elements for years to come. This might give the GOP enough time to retake the presidency and execute a full-scale repeal strategy.

Let's see how the major health care plan providers have responded so far to this seismic shift in political power.

UnitedHealth (UNH) -- Weekly Source: eSignal

UnitedHealth Group

(UNH) - Get Report

is the highest-capitalized health care plan provider in the U.S., valued at more than $40 billion. It took a huge dive during the 2008 credit collapse, just like the rest of the world markets. The stock's recovery since the bear-market low has been sedate, recovering just half of its 45-point decline.

Price action since January of this year has been especially weak, with a recovery high at $36 that was followed by a long and volatile correction. The stock hit bottom ahead of the broad indices in July, returned to resistance in September and broke out last month (green line) in anticipation of a more favorable political climate.

Sadly, the uptrend has died on the vine during the last two weeks as the actual elections results failed to attract fresh buying interest. It's especially troublesome that this stock, and the entire sector, failed to join other market groups in last week's QE 2-fueled rally. However, price is still holding near the 52-week high and could resume its upward trajectory soon.

WellPoint (WLP) -- Weekly Source: eSignal

Wellpoint

(WLP)

is number two on the sector capitalization list, although it is only half the size of UnitedHealth. It performed better than its competitor right after the bear market ended, rising 62% during the selloff retracement to $70 and topping out about 11 months ago.

But the stock's performance since that time has been far worse, with price stuck at the midpoint (red line) of this year's selloff into the mid $40s.

It rallied above the 50-week moving average in September and has bounced off that key level three times in the last two months. It's now risen into double-top resistance near $59 and could head toward even stronger resistance in the mid $60s. Given the poor technical tone, compared to its peers, this stock appears to be a casualty of the political wars and shouldn't be bought until it rallies above the January high.

Humana (HUM) -- Weekly Source: eSignal

This year has been kind to

Humana

(HUM) - Get Report

, which is now trading at a multiyear high. It initially topped out in January at $52.66, entered a bowl-shaped correction and then lifted back to a high in September. That positive price action completed a two-year basing pattern, with resistance near $53.

The stock broke out in mid October and surged up to $60, where it has been consolidating its healthy gains for the last week. A tight sideways pattern at this level, or a pullback to new support in the lower $50s, can be bought for a continued uptrend that should eventually test the 2008 high at $88.

Aetna (AET) -- Weekly Source: eSignal

Aetna

(AET)

, a top performer in the first half of the decade, broke a three-year topping pattern in the mid $30s in 2008 (red line) and plunged to a five-year low. It rallied to resistance twice in 2009 and again in April of this year. The stock was turned away on each test, with that level standing out like a sore thumb on the weekly chart. It's now trading about five points below that major barrier.

Buying interest has perked up since August, with accumulation now sitting at a five-month high. This suggests that price will soon follow and head into another test at resistance. Despite improving technicals, expect limited progress in the next few months, with a real uptrend not catching fire until the stock finally pushes into the upper $30s.

At the time of publication, Farley held no positions in the stocks mentioned.

Alan Farley is a private trader and publisher of

Hard Right Edge

, a comprehensive resource for trader education, technical analysis, and short-term trading techniques. He is also the author of

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, due out in April. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks.

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