The Health Care SPDR (XLV) is the strongest sector over the last six months (+19%) and the HealthCare Providers ETF (IHF) is one of the strongest industry groups (+27%). UnitedHealth (UNH) is the top holding in IHF and accounts for 12.5% of the ETF. UNH has a small bullish continuation pattern working and momentum is turning up.
The chart shows UNH within a long-term uptrend. The 50-day EMA is above the 200-day, price is well above the rising 200-day EMA and the stock hit a new high in early September.
After hitting this high, UHN stalled with a small triangle. Small consolidations can lead to small breakouts and modest gains, while big consolidations, like the triangle seen earlier this year, can lead to big breakouts and big gains. UNH surged over 1% today and broke the upper line of the triangle. This ends the small consolidation and signals a continuation of the ongoing uptrend.
The indicator window shows the PPO moving to its lowest level since April and turning up over the last few days. This momentum indicator broke above its signal line and this is also a short-term bullish indication.
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- Arthur Hill, CMT
Senior Technical Analyst, StockCharts.com