How We Mapped Out This Trade On UnitedHealth Group (UNH)

As we often say, finding levels and price where stocks react to the upside or downside and drawing those levels out on your charts is exactly like mapping out the market for that particular stock. They tell you when to go short and when to go long as a map would tell you to go left and to go right until you get to your destination.

When we look at a stock like UnitedHealth Group (UNH) you see that this is very much the case. After bouncing hard off the floor of support at 445 the stock made quick work of moving around $20-30 where it then consolidated for some time. This consolidation was a result of the bulls and bears battling over trying to find an imbalance to one side or another.

The two levels that formed the top and bottom of this channel as the two sides fought it out were 483 at the top and 473 toward the bottom. Well, this week, it would appear the bear prevailed momentarily as the stock broke through that floor on a move lower.

This would imply a move lower for the stock, especially if the market were to move lower as it did this morning on the back of some hot jobs data dropped by ADP. Now, the target we have our sights set on if this move has legs would be around the 460 mark, a substantial move to the downside.

For those of you looking to take a short position, this is the stock to keep an eye on. However, be sure to draw your map on your charts so you have visual representation of where the stock’s price will react next.

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