When there’s blood in the streets,…you buy healthcare. Here are some trade ideas for HUM, THC, UNH and HCA. (April 16, 2019)
HUM THC HUM THC HUM UNH HCA
I want to talk about a strategy that I taught to members just last week, I call it my Blood in the Streets Methodology. It is essentially how to buy deeply oversold stocks. We really looked at gaps, like buying these big gaps down according to certain parameters and stuff like that.
One thing I want to emphasize here; one of our members was asking about this and it really got me thinking. I have set these Bollinger Bands to three standard deviations typically it is two. He said, “A lot of these healthcare stocks have taken such deep dives they are below three standard deviations.” From a mathematical standpoint that is like a felony, it is like a capital crime; stocks just don’t do that. So the question was, Hey, can I go ahead and buy these as an oversold bounce? I am thinking about it, as far as how to answer the question, and I thought, I will just do it in this video; I want everybody make money even if you are not a member so I am making this one free.
It is pretty simple, I think if you buy any of these stocks that I am showing, in any kind of size and size is dependent on what your portfolio is, that’s your decision, you will probably make, even with the smallest account, you will make enough for a few months subscription to Stock Market Mentor pretty easy. And this is why: Because these stocks are so oversold you can almost guarantee that the stock is going to rebound here. In this chart ( NYSE: HUM ) there is only one time that I can see where the stock sold below three standard deviations and that was here when it was just getting going and the bands really weren’t really that wide. And so the stock did have further to fall for a couple of days, but even then it ultimately rebounded. What I am telling you is this, you buy this stock now I think you are going to make money.
You can see how the stock today even after hours, it is really low volume. Here’s your low; the low for this trade, we’ll put it right here, you are buying the stock where you can and your stop is right below this level. So you are risking less than 2 percent in buying this stock; we’ll put the arrow in red so it looks like a stop, which is what it is. The idea is not that you are going to buy this stock here and ride it back up to 250.00; you just want to buy the stock and take it however high the stock goes, that’s an intraday trading thing. But if you buy this stock here I think you will make at least a couple bucks.
Tenet Healthcare ( NYSE: THC ), the same thing. But the difference is, this kind of cuts both ways, it looks to me like this stock is just kind of getting going. It has had this big move up after a consolidation here. You would hope that the stock would move higher here but it didn’t. Instead, it is doing this. So I think there are a fair amount of traders that are trapped in here and there will be some selling pressure into any kind of move so I look at this as different than this type of stock ( NYSE: HUM ), which has been falling so much.
Do you get what I am talking about here? Most of you do. Here at 25.59, that’s the low. I really feel like you need to see how this trades tomorrow. If it is above 25.59 in the morning then you go ahead and buy the stock but keep your stop below today’s intraday low. This is a little riskier, again, just because of the configuration here, it hasn’t been selling off so much like Humana ( NYSE: HUM ) did.
Then how about United Health ( NYSE: UNH )? This was a good oversold rebound here. I am pretty sure somebody asked me, but I could be wrong, I think yesterday somebody was asking me about this; it might have even been the same guy, “What do you think?” And I said, “Well, I don’t know, so heavy, I probably wouldn’t do it.” And that was my analysis but it turns out that, that was an okay trade for a couple of percent, not a big deal. But this is why you don’t want to overstay your welcome on this. The stock gaps up and then gets absolutely crushed on earnings, right? Report earnings today so now this stock is back down and you can look for a similar type of move tomorrow.
So far of the three I am showing you, Humana ( NYSE: HUM ), Tenet Health ( NYSE: THC ), and United Health Group ( NYSE: UNH ) I am looking at Humana ( NYSE: HUM ) as the one that is showing the best possibility. Now we bring in HCA ( NYSE: HCA ) and this is probably the best one yet, in my view; because the low of the day here is 113.61, that’s my frame of reference for a stop. I would keep at a stop at 113.75 or something like that; keep a very tight stop there. Buy the stock because it is well below this third standard deviation and look for a few bucks. Don’t ask for more than the stock is going to give you, this is why they call these dead cat bounces, throw a dead cat off of a 10-story building and it will bounce a little bit. That’s really all we are looking for on this.
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