Stock Of The Day – Where Will The UnitedHealth Selloff End?

Trading in UnitedHealth Group Incorporated UNH was quiet Monday. This comes after Friday's drop of more than 20%. The company reduced its annual guidance to $26.00 to $26.50 per share. The previous guidance was close to $30.00 per share.

But the selloff may soon end. This is why our team of traders has made UH our Stock of the Day.

“Buy at former bottoms” is an old expression on Wall Street. It refers to how, sometimes, when a stock drops to a price level that had previously been support, there is a good chance that it will find support again. There is also a good chance that a rally follows.

You can see on the chart that since January 2022 UnitedHealth has dropped to the $435.00 level seven times. Each time it found support and each time was followed by a move higher.

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Now the stock is closing in on this important level again.

If a stock is trending lower, it is because there are more shares for sale than there are to be bought. Investors and traders who wish to sell are forced to push the price lower if they want to draw buyers in from the sidelines.

This price action results in a downtrend.

Support is a price level or zone where there is a large amount of buy interest. There are as many, or possibly even more shares to be bought as there are for sale. This is why downtrends pause or end when they reach support.

At times, those who created the support with their buying become concerned that others who wish to buy will be willing to pay a higher price than they are. As a result, they increase their bid prices. Other concerned buyers see this and raise their bid prices as well.

It could result in a bidding war that forces the stock into an uptrend. This may be about to happen once again with UnitedHealth.

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