Humana’s Technical Diagnosis Is Not Good – Sell Now

by Sam Collins | October 8, 2013 1:18 am

Humana (HUM[1]) — This large-cap 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 will benefit from the new health care reform law.

On May 23[2], I pointed out that S&P had increased its operating earnings per share estimate (EPS) to $8.34 from $7.90 for 2013, and to $8.85 from $8.50 for 2014. At the time, analysts’ consensus estimate was $90, but from a technical viewpoint, I said, “long-term investors could benefit from an adjusted longer-term objective of $95.”

My target has been achieved, and the uncertainties surrounding the health care reform law have increased.

The stock is still in an uptrend supported by its 50-day moving average, but the intermediate support line has been broken and the 50-day moving average is under attack. Therefore, both traders and long-term investors should either protect positions by writing calls or log a profit. A market correction could drive HUM close to its 200-day moving average at $81 where we would again be buyers.

HUM Chart
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Chart Key[3]

  1. HUM:
  2. On May 23:
  3. [Image]:

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