5 Hospital Stocks Rally After the Supreme Court Ruling on the ACA

NEW YORK (TheStreet) -- Community Health Systems (CYH), HCA Holdings (HCA), LifePoint Health (LPNT), Tenet Healthcare (THC) and Universal Health Services (UHS) are five hospital stocks that surged on Thursday's news that the Supreme Court ruled in favor of the Affordable Care Act, with regard to tax subsidies that benefit hospitals.

The ACA became law in 2010, and a provision provides tax credits for all 50 states, not just those that set up their own health care insurance exchanges. Hospitals are most sensitive to the costs associates with the ACA, and thus these stocks jumped, but the strength that continued into Monday could have gone too far too fast.

Here are the technical profiles for the five hospital stocks, including key levels at which to buy on weakness or key levels at which to sell on strength:

Community Health Systems closed at $63.05 on Monday, up 16.9% year to date and traded to an all-time intraday high of $65 on Monday. The stock is up 38.5% since trading as low as $45.51 on Feb. 9.

The stock has a positive but overbought weekly chart, with the stock above its key weekly moving average of $57.43 and its 200-week simple moving average of $38.13 last tested at $28.13 during the week of Nov. 16, 2012.

Investors looking to buy Community Health Systems should place a good 'til canceled limit order to buy the stock if it drops to $59.48, which is a key level on technical charts until the end of the week.

HCA Holdings closed at $90.61 on Monday, up 23.5% year to date and traded to an all-time intraday high of $93.09 on Monday but closed below Friday's low of $61.27, which is a potential, key reversal day. The stock is up 36% since trading as low as $66.63 on Feb. 9.

The stock has a positive but overbought weekly chart, with the stock above its key weekly moving average of $84.44 and its 200-week SMA of $45.53.

Investors looking to buy HCA Holdings should place a good 'til canceled limit order to buy the stock if it drops to $54.82, which is a key level on technical charts until the end of the year.

Investors looking to reduce holdings should place a good 'til canceled limit order to sell stock if it rises to $92.73, which is a key level on technical charts until the end of the week.

LifePoint Health closed at $86.10 on Monday, up 19.7% year to date and traded to an all-time intraday high on Monday of $86.41. The stock is up 33.4% since trading as low as $64.52 on Feb. 2.

The stock has a positive weekly chart with the stock above its key weekly moving average of $78.62 and its 200-week SMA of $51.91, last tested at $30.75 during the week of Aug. 12, 2011.

Investors looking to buy LifePoint Health should place a good 'til canceled limit order to buy the stock if it drops to $82.20, which is a key level on technical charts until the end of the week.

Tenet Healthcare closed at $56.87 on Monday, up 12.2% year to date and traded to its 2015 intraday high of $59.21 on Monday. The stock is up 37.1% since trading as low as $41.47 on Feb. 2.

Monday's close was below the low of $57.02 on Friday, setting up a potential key reversal day.

The stock has a positive but overbought weekly chart, with the stock above its key weekly moving average of $53.36 and its 200-week SMA of $38.02, last tested at $18.71 during the week of Aug. 10, 2012.

Investors looking to buy Tenet Healthcare should place a good 'til canceled limit order to buy the stock if it drops to $32.05, which is a key level on technical charts until the end of the year.

Investors looking to reduce holdings should place a good 'til canceled limit order to sell stock if it rises to $57.57, which is a key level on technical charts until the end of the week.

Universal Health Services closed at $141.32 on Monday, up 27% year to date and traded to an all-time intraday high of $144 on Thursday. The stock is up 39.6% since trading as low as $101.20 on Feb. 2.

The stock has a positive but overbought weekly chart with the stock above its key weekly moving average of $132.14 and its 200-week SMA of $72.63, last tested at $32.88 during the week of Oct. 7, 2001.

Investors looking to buy Universal Health Services should place a good 'til canceled limit order to buy the stock if it drops to $85.46, which is a key level on technical charts until the end of the year.

Investors looking to reduce holdings should place a good 'til canceled limit order to sell stock if it rises to $144.75, which is a key level on technical charts until the end of the week.

 

 

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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