Humana’s ‘Sell’ Signal May Be a Good Sign for Potential Buyers

by Sam Collins | May 23, 2013 1:15 am

Humana’s ‘Sell’ Signal May Be a Good Sign for Potential Buyers

Humana (NYSE:HUM[1]) — 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 is capable of benefitting from the new health care reform law. Since our last buy recommendation in March[2], S&P has increased its operating earnings per share (EPS) estimate for 2013 to $8.34 from $7.90, and looks for $8.85, up from $8.50, in 2014. Analysts’ consensus median target is $90, and the stock has a current dividend yield of 1.3%.

On March 14, the Trade of the Day said, ” 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.”

At that time, I said to buy HUM for a trade to $81. That target was hit on April 2, and was followed by a pullback to its 200-day moving average at about $72, where it reversed to again test the high at $81.

Last week, HUM backed down from $81 and flashed a MACD sell signal. The stock could pull back to the strong support zone between $72 and $75, which is our new buy point. Traders may want to log a profit now, but long-term investors could benefit from an adjusted longer-term objective of $95.

05 23 13 hum 300x184 Humana's 'Sell' Signal May Be a Good Sign for Potential Buyers
Click to Enlarge

chart key 300x84 Humana's 'Sell' Signal May Be a Good Sign for Potential Buyers[3]

Endnotes:
  1. HUM: http://studio-5.financialcontent.com/investplace/quote?Symbol=HUM
  2. buy recommendation in March: http://investorplace.com/2013/03/trade-of-the-day-humana-nyse-hum-2/
  3. [Image]: http://investorplace.com/wp-content/uploads/2011/04/chart-key.gif

Source URL: http://investorplace.com/2013/05/trade-of-the-day-humana-nysehum/
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