The Affordable Care Act, popularly known as Obamacare, became the law of the land on March 23, 2010. The promise of increased business had shares of Aetna (AET) , Humana (HUM) , Anthem (ANTM) and Cigna (CI) surging until they peaked in mid-2015. Then that these major insurers sought mergers to reduce costs, finding they weren't making as much as hoped from the HealthCare.gov exchanges. To varying degrees, the companies decided to shift away from or leave the program.
Regulators didn't approve the proposed mergers. Aetna wants to buy Humana, and Anthem wants to buy Cigna. These health insurance providers believe that the mergers would reduce costs, but U.S. regulators have balked on fears of reduced competition. Some providers are thus leaving unprofitable exchanges.
The election of Donald Trump as the 45th President of the United States has these health insurer stocks on the rise again.
Let's explore their weekly charts and key trading levels.
The weekly chart shows a red line through the price bars, marking the key weekly moving average (a five-week modified moving average). The green line is the 200-week simple moving average, the "reversion to the mean."
The study in red along the bottom of the chart is weekly momentum (a 12x3x3 weekly slow stochastic), which scales between 00.00 and 100.00, where readings above 80.00 indicate overbought and readings below 20.00 indicate oversold.
A negative weekly chart shows the stock below its key weekly moving average, with weekly momentum declining below 80.00 in a trend toward 20.00. A positive weekly chart shows the stock above its key weekly moving average, with weekly momentum rising above 20.00 in a trend towards 80.00.
Here's the weekly chart for Aetna.
Courtesy of MetaStock Xenith
Aetna closed Wednesday at $130.84, up 21% year to date. It is in bull market territory, 41.6% above its Feb. 9 low of $92.42.
The weekly chart for Aetna is positive, with the stock above its key weekly moving average of $120.71, and well above its 200-week simple moving average of $90.67. The weekly momentum reading is projected to rise to 66.11 this week, up from 52.25 on Nov. 25.
Investors looking to buy Aetna should consider doing so on weakness to $118.19, which is a key level on technical charts until the end of this week. Investors looking the reduce holdings should consider doing so on strength to $142.50, which is a key level on technical charts until the end of 2016.