UNH: Monthly outlook UNH is an interesting case study, fundamentals vs technicals vs math.
If you were sleeping, here are the cliff notes on UNH:
UNH is alleged to have commited the following violations/criminal offences
Medicare Overbilling: The U.S. Department of Justice has accused UNH of overcharging Medicare by more than $2.1 billion, allegedly by manipulating diagnosis codes to inflate payments.
Securities Fraud: A class action lawsuit claims UNH misled investors by denying coverage to boost profits, which allegedly contributed to a sharp drop in stock value.
Undisclosed Payments: Reports suggest UNH made secret payments to nursing homes to reduce hospital transfers, potentially compromising patient care.
How did it come to light, you ask?
From whistleblowers, investigative journalists and a DOJ probe (department of justice).
While the investigation is ongoing, if they are found guilty of any or all of these allegations, the penalties could be:
Billions in fines
Civil damages
Criminal charges
Sanctions that can fundamentally interfere with how they do/conduct business
With that out of the way, ask yourself: Am I buying this while there is an ongoing criminal investigation that could very well result in the insolvency of an organization?
I know a lot of people think the charts tell the news, but something this serious unfortunately can't be foretold by a chart, in my opinion.
But let's humour the fallacy that these traders have, and entertain whether or not UNH could theoretically be a buy.
Technicals:
Oversold, obviously.
No clear bottom pattern.
No clear chart pattern at all.
Massive investor exodus, with the current selling volume being almost as much as the flash crash we had the beginning of this year and the third highest in UNH's long, long life on the NYSE.
Math:
While UNH is below is quadratic mean, it has not triggered a bullish mean reversion signal yet.
Forecast into next week is bullish with some upside bouncing expected.
Mid term forecast (over the next month) has it coming down to 220.
The math levels are posted in the chart and 220 is actually the second low target on the month, so that's interesting.
This will go lower obviously if guilt is found or damming evidence comes forth in the media over the next days. I say this because UNH popped up on my sweep alerts. Four (4) very large option orders have popped up on my order flow screener for UNH, totaling over 7 million in short premiums (puts).
First is the 480 put strike expiry 08-15 of this year with 4.2 million in premiums bought.
Second is the 530 put strike, expiry 09-19 of this year with 634 k in premiums bought.
Third is the 540 put strike, expiry 09-19 with 815 k of premiums bought.
Last is the 600 put strike, expiry 01-16-2026 with 554 k of premiums bought.
This obviously has me interested that someone knows something about stuff.
But this is not advice, just reporting what I see.
Safe trades everyone!
