December 10th, 2009

HMO Stocks: AET, UNH and WLP

Even the best in sports needs coaching from someone who can give them objective feedback and playing the stock market game as an individual investor is no exception. A long-time reader and someone I’ve been mentoring since the last summer’s start, let’s call him Eric, alerted me to an industry group with charts that have many of the same characteristics as the general market had when we saw the inverted head-and-shoulders in the S&P 500 Index. One knows they’ve done an excellent job of mentoring when the mentee teaches the mentor.

This was recently brought home to me when Eric suggested I take a look at WLP (Wellpoint), a member of IBD’s Medical-Health Maintenance Organization Industry Group. The last time I wrote about medical stocks was on February 4, when I wrote:

“Will market participants see all this resistance overwhelming or will traders large take a move towards and above each one of these obstacles (along with favorably received Government action) be a signal for more money to be moved out of Treasuries and into riskier equities.

While still mostly on the sidelines myself (80% in cash), I have edged out into some equities. I’m always on the lookout for more stocks with good charts that also have met or are close to meeting the additional criteria of have a “golden cross”. Many of these stocks happen to be in the defensive healthcare industry groups like pharma, drugs and biotech.”

Charts included in the post were

  • MTXX (then 18.19 but trashed in June due to having to pull Zycam from the market),
  • SIGA (then 4.02, yesterday 8.66, or 215%),
  • CMN (then 14.68, yesterday 19.45 or 133%) and
  • SXCI (then 20.00, yesterday 52.02, 260%)

Oh, if I had just followed my own advise and stuck with those recommendations. But there may be another opportunity (albeit, with the market’s completely different backdrop … anticipating a correction rather than anticating the recovery) among the 15 HMO stocks. Some have experience significant appreciation since March 5 like CVH (178%), CI (160%) or HNT (108%). But these three (including Eric’s WLP) caught my eye as group members that have a good chance, with what appears as debate on the healthcare approaching some closure, to begin finally to follow the herd:

  • AET (Aetna)
  • UNH (United Health)
  • WLP (Wellpoint)
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  • Anonymous

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  • Joe

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