Time to Book Profits in Aetna, WellPoint, 6 Other Health Care Stocks

NEW YORK (TheStreet) -- I have had a positive outlook for health care-related companies in 2014 on the prospect of new business generated through Healthcare.gov.

On March 21, I wrote, Health Care Stocks Are Soaring; Here's How to Invest in Them, and on that day, three of the eight stocks I profiled set new 2014 intraday highs. The other five set 2014 highs this week on Wednesday or Thursday.

Seven of the eight health care stocks beat or matched analysts' earnings-per-share estimates for the first quarter, but remember that open enrollment on Healthcare.gov came to an end on March 31, and so investors should consider taking some profits on recent strength.

The profiles below provide trading guidelines for the stocks in two 'crunching the numbers" tables that follow.

Aetna (AET)AET ($73.70, down 2.2% since March 20): On April 24, the company reported earnings per share at $1.98 beating analysts' estimates by 42 cents. The nation's largest health benefits company traded to an all-time intraday high at $76.71 on March 21 and went traded as low as $66.85 on April 17, testing its 200-day simple moving average, providing a buying opportunity.

The weekly chart shifts to negative given a weekly close below its five-week modified moving average at $71.80. Quarterly and semiannual value levels are $65.82 and $63.63, respectively, with a monthly risky level at $75.09.

Centene (CNC)CNC ($67.79, up 4% since March 20): On April 22, the company reported EPS at 79 cents beating analysts' estimates by 35 cents. The health care services provider traded as low as $55.11 on April 17, and then turned around on a dime, gapping above all three daily moving averages on April 22, setting an all-time intraday high at $69.04 on Thursday.

The weekly chart is positive with the five-week MMA at $63.40. Monthly and semiannual value levels are $66.88 and $59.60, respectively. Investors thus had the opportunity to buy this stock at $59.60.

CNO Financial Group (CNO)CNO ($16.71, down 13% since March 20): On April 28, the company reported EPS at 28 cents, which matched analysts' estimates. The parent of Colonial Penn and Conseco Insurance Group and Bankers Life set a multiyear intraday high at $19.33 on March 21, and declined to as low as $16.32 on Wednesday, holding its 200-day SMA at $16.41.

The weekly chart is negative with the five-week MMA at $17.38. Semiannual value levels are $15.32 and $15.12 with quarterly and monthly risky levels are $18.77 and $20.27, respectively.

Health Net (HNT)HNT ($37.44, up 7.3% since March 20): On Wednesday, the company reported EPS at 39 cents, which missed analysts' estimates by 4 cents. The managed-care provider traded as low as $30.39 on April 17, just below its 200-day SMA at $31.62.

Despite the earnings miss, the company touted a significant increase in Medicare sign-ups, and with a brokerage upgrade, the stock took off in a moon shot trading as high as $38.63 on Thursday.

The weekly chart is positive with the five-week MMA at $34.04. Monthly and semiannual value levels are $34.69 and $33.13, respectively, with an annual pivot at $36.55 and semiannual risky level at $39.45. Investors following our March 21 post could have booked profits at $36.55 as the risky level shown.

Humana (HUM)HUM ($116.72, down 1.7% since March 20): On Wednesday, the company reported EPS at $2.35, which beat analysts' estimates by 41 cents. The provider of health care services networks traded as low as $103.89 on April 17, and as high as $119.86 on Wednesday on the better-than-expected earnings report.

The weekly chart is neutral with its five-week MMA at $110.11 with declining 12x3x3 weekly slow stochastic. Monthly and semiannual value levels are $115.62 and $112.88, respectively.

UnitedHealth Group (UNH)UNH ($76.89, down 5.7% since March 20): On April 17, the company reported EPS at $1.10, which beat analysts' estimates by a penny. The health care provider and Dow component traded to an all-time intraday high at $83.32 on March 21, and traded as low as $73.61, holding its 200-day SMA at $73.90. The stock traded as high as $78.06 on Thursday.

The weekly chart shifts to negative given a weekly close below its five-week MMA at $76.87. Semiannual and quarterly value levels are $75.19 and $74.78, respectively, with a monthly pivot at $77.43 and semiannual risky level at $79.65.

WellCare Health Plans (WCG)WCG ($71.04, up 6.1% since March 20): On Tuesday, the company reported EPS at $1.13, which beat analysts' estimates by $1.09. The provider of managed care services for government-sponsored programs traded as low as $55.16 on Feb. 12, and traded around its 200-day SMA at $66.79 until popping to as high as $73.34 on Thursday.

The weekly chart is positive with its five-week MMA at $65.98. Semiannual and annual value levels are $64.56 and $57.19, respectively, a monthly pivot at $71.11 and semiannual risky level at $75.35.

WellPoint (WLP)WLP ($103.28, up 3.6% since March 20): On April 30, the company reported EPS at $2.30 which beat analysts' estimates by 18 cents. The health benefits company with affiliations with some Blue Cross and Blue Shield associations traded as low as $90.75 on April 17, and hit an all-time intraday high at $105 on Wednesday.

The weekly chart profile is positive with the five-week MMA at $97.14. Monthly and semiannual value levels are $99.57 and $84.41, respectively.

Your investment policy among these stocks depends on whether or not you are a buyer on weakness or a seller of strength. We advocate using a good-'til-cancelled limit order to buy weakness to a value level or to sell strength to a risky level.

Crunching the Numbers with Richard Suttmeier: Moving Averages & Stochastics

This table provides the technical status for the stocks profiled in today's report.

There are five columns with moving average titles: Five-Week Modified Moving Average, 21-Day Simple Moving Average, 50-Day Simple Moving Average, 200-Day Simple Moving Average and the 200-Week Simple Moving Average.

The column labeled 12x3x3 Weekly Slow Stochastics shows the pattern on each weekly chart with readings from Oversold, Rising, Overbought, Declining or Flat.

Interpretations: Stocks below a moving average are listed in red.

Five-Week Modified Moving Average (MMA) is one of two indicators that define whether or not a weekly chart profile is positive, neutral or negative. The other is the status of the 12x3x3 weekly slow stochastic.

A stock with a positive technical rating is above its five-week MMA with rising or overbought stochastics.

A stock with a negative technical rating is below its five-week MMA with declining or oversold stochastics.

A stock with a neutral technical rating has a profile that is not positive or negative.

The 200-Week Simple Moving Average (SMA) is considered a long-term technical support or resistance and as a "reversion to the mean" over a rolling three to five year horizon. (even Apple declined to its 200-week SMA in June 2013)

The 21-Day Simple Moving Average is a short-term technical support or resistance used by many hedge fund traders to adjust positions. A stock above its 21-day SMA will likely move higher over a rolling three to five day horizon and vice versa.

The 50-Day Simple Moving Average is also a technical support or resistance used by many strategists and commentators in financial TV.

The 200-Day Simple Moving Average is another technical support or resistance and I consider this level as a shorter-term "reversion to the mean" over a rolling six to 12 month horizon.

Crunching the Numbers with Richard Suttmeier: Earnings & Where to Buy & Where to Sell

This table presents the EPS estimates including date and before or after the close, and where to buy on weakness and where to sell on strength.

EPS Date is the day the company reports their quarterly results.

EPS Estimate is the earnings per share estimate from Wall Street analysts.

Value Levels, Pivots and Risky Levels are calculated based upon the last nine weekly closes (W), nine monthly closes (M), nine quarterly closes (Q), nine semiannual closes (S) and nine annual closes (A). I have one column for pivots, which is a magnet for the period shown. The columns to the left of the pivots are first and second value levels. The columns to the right of the pivots are first and second risky levels.

Investors who wish to buy a stock should use a good-until-canceled GTC limit order to buy weakness to a value level. Investors who want to sell a stock should use a GTC limit order to sell strength to a risky level.

>>Read More: Biotech Mailbag: Sarepta, F-R Rule Stock, Prediction, Merrimack

>>Read More: Why I Love Amazon, but Hate the Stock

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

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This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff

Richard Suttmeier is the chief market strategist at ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

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