Humana’s Golden Cross Points to Healthy Returns for Traders

Formation preceded by possible selling climax, followed by MACD buy signal


Humana (NYSE:HUM) — This huge managed health care company provides a broad range of services to over 12 million individuals. Because of its diversity and financial stability, analysts believe it’s capable of benefitting from the new health care reform law.

S&P estimates operating earnings per share (EPS) will increase to $7.90 in 2013, up from $7.47 in 2012, and looks for $8.50 in 2014. Analysts’ consensus median target is $86, and HUM pays a dividend of $1.04 for a 1.5% yield.

The stock’s all-time high was made in January 2012 at over $96. After six months of declining, it bottomed at just under $60 in July, and proceeded to form a bull channel with current support at $67 and resistance at $81 (the bearish resistance line).

In late February, the 50-day moving average crossed above the 200-day moving average triggering a golden cross, which usually results in a long-term change of trend from negative to positive. The cross was preceded by a possible selling climax in mid-February, and it was followed by a MACD buy signal on Wednesday.

Buy HUM for a trade to $81. Long-term investors may benefit from a bull market reversal with a target near its old high of $95.

HUM Chart
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Trade of the Day Chart Key

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