NEW YORK (TheStreet) -- Health care-related stocks such as Aetna (AET), CNO Financial (CNO) and UnitedHealth (UNH) have become momentum trades. Today I'll provide you with information on how to trade them.
Share prices have moved higher for seven of the eight health care stocks in today's "Crunching the Numbers" table (see page 2). The table contains key moving averages, and all eight stocks are above all moving averages, which is a sign of technical momentum.
All eight also have either rising or overbought 12x3x3 weekly slow stochastics, another sign of technical momentum.
The rush to enroll in Obamacare is a factor for these stocks, as open enrollment on HealthCare.gov comes to an end on March 31.
If you already own any of these companies, you can use this information to adjust positions. If you are building positions, consider adding to longs using good 'til cancelled limit orders to buy weakness to a moving average or value levels shown in the table.
If you are reducing positions to book profits, consider doing so using GTC limit orders to sell strength to a moving average or to the risky levels shown in the table.
Aetna ($75.39 vs. $68.59 on Dec.31, up 9.9% year to date) is the nation's largest health benefits company. Shares traded as low as $64.68 on Feb. 13 then rallied to a new all-time intraday high at $76.38 on Thursday. The stock stayed just above its 200-day simple moving average at the 2014 low and tested my quarterly value level at $66.86, providing a buying opportunity. The weekly chart is positive, with its five-week modified moving average at $71.52. This month's value level is $71.03.
Centene (CNC) ($65.20 vs. $58.95 on Dec. 31, up 11% YTD) provides health care services to individuals. The stock traded as low as $56.88 on Feb. 4 staying above its 200-day SMA. The stock traded to a 2014 intraday high at $65.67 on Thursday. The stock began the year below my semiannual pivot, now a value level at $59.60 and tested my quarterly value level at $57.28 at the low. The weekly chart is positive but overbought with the five-week MMA at $62.60. This month's risky level is $67.40.
CNO Financial ($19.15 vs. $17.69 on Dec. 31, up 8.3% YTD) is the parent of insurance companies including Colonial Penn and Bankers Life. Agents of Bankers can sell health care plans offered by Humana. The stock traded as low as $16.07 on Feb. 5 and set a multiyear intraday high at $19.26 on Thursday. The stock began the year below a quarterly pivot at $17.86, which is now a value level. The weekly chart is positive but overbought with the five-week MMA at $18.26. A monthly risky level is $19.47.
Health Net (HNT) ($34.89 vs. $29.67 on Dec. 31, up 18% YTD) is a managed care provider. The stock moved above its 200-day SMA on Jan. 14 and traded to a 52-week intraday high at $35.70 on March 11. The weekly chart is positive but overbought with the five-week MMA at $33.22. My semiannual pivot at $33.12 is now a value level, and there are annual and semiannual risky levels at $36.55 and $39.45, respectively.