WellPoint, Inc., a health benefits company, through its subsidiaries, offers network-based managed care plans to large and small employer, individual, Medicaid, and senior markets in the United States. The company operates through three segments: Commercial, Consumer, and Other. Its managed care plans include preferred provider organizations, health maintenance organizations, point-of-service plans, traditional indemnity plans, and other hybrid plans, including consumer-driven health plans, and hospital only and limited benefit products. The company also provides various managed care services comprising claims processing, underwriting, stop loss insurance, actuarial services, provider network access, medical cost management, disease management, wellness programs, and other administrative services to self-funded customers. In addition, it offers specialty and other insurance products and services, including behavioral health benefit services; dental, vision, life, and disability insurance benefits; radiology benefit management; analytics-driven personal health care guidance; and long-term care insurance.
To review WellPoint’s stock, please take a look at the 1-year chart of WLP (WellPoint, Inc.) below with my added notations:
WLP has formed a solid resistance at $90 (navy), which would also be a 52-week high breakout if the stock could manage to break above it. In addition, the stock has been climbing a trendline of support (blue). These two levels combined have WLP sandwiched within a common chart pattern known as an ascending triangle. At some point, the stock will eventually have to break one of those two levels.
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The Tale of the Tape: WLP has an up trending support and a 52-week resistance level to watch. A long trade could be made on a breakout above the $90 resistance or on a pullback to the support, which is approaching $85. A break below the up trending support could be an opportunity to enter a short trade.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT
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