Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.
Humana Inc. (NYSE:HUM) – The health care company has acted well so far this year despite a sizable setback along with the rest of the market this summer. And the non-cyclical health care sector has bounced hard off the August lows, which led me to take a closer look at this stock again.
On the weekly chart, the strong uptrend from the early 2009 lows sticks out. That trendline again proved its worth in August as the sell-off in the stock managed to come to a halt right at the trendline, and the stock bounced hard since.
The daily chart of HUM shows the consolidation triangle, also known as a narrowing trading range, which has been developing for the past two months. The stock is again trading above its 50-day simple moving average, and last week broke out of the triangle formation, which is now being tested again.
Given the current volatility in broader markets, it would not be surprising to see the stock slip back into the triangle but then eventually find enough strength to move higher again.
A daily close above yesterday’s high near $80 would be a solid place to enter this trade to the long side. In that case, stops could be placed near $76 and a first profit target near $85 followed by $90.
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