Sell Aetna, Anthem, 5 Others on Jump from Supreme Court's 'Obamacare' Ruling

NEW YORK (TheStreet) -- Aetna  (AET), Anthem  (ANTM), Cigna  (CI), Centene (CNC), Health Net (HNT), Humana  (HUM) and UnitedHealth (UNH) are seven health insurance companies that have benefited from the Affordable Care Act, aka Obamacare, since it became law in 2010. These stocks got a big boost Thursday when the U.S. Supreme Court upheld the law.

Between September 2010 and January 2013 shares of these health insurance stocks formed bottoming patterns and began strong upward parabolic momentum trends. Four of the seven set new all-time intraday highs on Thursday after the Supreme Court ruling.

Recently, there's been a wave of stories concerning five of these companies in what can be called a merger mania. This, plus the formation of parabolic bubbles should be incentives for investors to book profits on these stocks.

Let's measure the share price performances for these seven stocks and in each profile mention whether or not that company has been talked about on the merger front. The weekly chart of the component of the Dow Jones Industrial Average, UnitedHealth will illustrate the overbought nature of these stocks.

The gains for these stocks over the past two years are reason enough to book profits.

Aetna had a close of $132.60 on Thursday, up 49.3% year to date after gaining 29.5% in 2014. Aetna began its parabolic upward momentum run during the week of Oct. 7, 2011, from its 200-week simple moving average then at $34.16. The stock has a positive but overbought weekly chart with the stock above its key weekly moving average of $118.60. Media stories indicate that Aetna approached Humana about a merger, while UnitedHealth indicated interest in Aetna.

Anthem had a close of $170.34 on Thursday, up 35.5% year to date after gaining 36% in 2014. Anthem began its parabolic upward momentum run during the week of March 8, 2013, from its 200-week simple moving average then at $62.65. The stock has a neutral weekly chart with the stock above its key weekly moving average of $162.75, but with declining weekly momentum. Media stories indicate that Anthem recently made a bid to buy Cigna.

Cigna had a close of $169.77 on Thursday, up 65% year to date after gaining 17.6% in 2014. Cigna began its parabolic upward momentum run during the week of Jan. 7, 2011, from its 200-week simple moving average then at $37.26. The stock has a positive weekly chart with the stock above its key weekly moving average of $144.65. Media stories indicate that Cigna is being approached by Anthem about a merger.

Centene had a close of $81.48 on Thursday, up 56.9% year to date after gaining 76.2% in 2014. Centene began its parabolic upward momentum run during the week of June 15, 2012, from its 200-week simple moving average then at $13.12. The stock has a positive but overbought weekly chart with the stock above its key weekly moving average of $74.53.

Health Net had a close of $65.04 on Thursday, up 21.5% year to date after gaining 80.4% in 2014. Health Net began its parabolic upward momentum run during the week of Dec. 27, 2013, from its 200-week simple moving average then at $28.22. The stock has a positive but overbought weekly chart with the stock above its key weekly moving average of $61.44.

Humana had a close of $197.37 on Thursday, up 37.4% year to date after gaining 39.1% in 2014. Humana began its parabolic upward momentum run during the week of Oct. 8, 2010, from its 200-week simple moving average then at $50.05. The stock has a positive but overbought weekly chart with the stock above its key weekly moving average of $195.43. Media stories indicate that Aetna has approached Humana about a merger, while UnitedHealth indicated interest in Aetna.

UnitedHealth had a close of $122.33 on Thursday, up 21% year to date after gaining 34.2% in 2014.

Let's look at the weekly chart for UnitedHealth.


Courtesy of MetaStock Xenith

UnitedHealth began its parabolic upward momentum run during the week of Dec. 31, 2010, from its 200-week simple moving average then at $36.01.The stock has a positive weekly chart with the stock above its key weekly moving average of $118.92. The momentum reading is projected to rise to 62.99 this week up from 58.53 on June 19. The highs of $123.76 set on March 30 and $123.41 set on June 25 could turn out to be a double-top given a weekly close below its key weekly moving average.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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