So let’s take a look at two of our three shorts plays we have going right now: (BBT) and (UNH). For both of these plays, the action we got out of the market today was pivotal. So let’s take a look at the BBT first..
BB&T Corporation (BBT):
I initiated a position at $27.25, followed by additional shares being added at $27.75 and $28.26. So far so good, the stock closed the day at $27.42 which makes us profitable so far, and was the most bearish action that we’ve seen from BBT since initiating the position, and for the stock in general, the most bearish since mid-July.
I would have loved to have seen more volume from the stock today, but in general it wasn’t all that bad. What we are currently looking at in BBT is what I like to call a Evening Star pattern, which is a 3-day candle pattern where you have a strong day, follow by a doji (open and close near the same price) near its highs, and finally a strong down day. The other significant observation that I found, is that this selling took place near major resistance levels, which likely means those who had gotten in a while ago, don’t have much faith in this stock moving through its previous highs, booked their gains and thus the reason for the sell-off.
The financials also struggled today, which may be a precursor to the market following in its footsteps, so it will be interesting to see what goes down with that in the days ahead.
UnitedHealth Group (UNH)
We initiated a trade in this stock at $28 and then followed up with another trade at $28.56. The trade hasn’t been all that worrisome until today in which it took off and bucked the market trend the entire day. The one positive out of today’s action on this stock was the fact that it managed to close just a few cents below its intra-day highs (it did though break it on an intra-day basis, but I don’t give much thought to that). Tomorrow will determine whether this stock reverses and comes back down off of its highs, or whether it breaks through resistance (which is quite significant overhead) and thus our stop in the process.
Mainly the fuel behind UNH moving up so strong is the fact that ObamaCare seems to be failing, especially the government take-over portion of the bill, which is a HUGE relief for the insurance companies. However, my opinion is that there probably will be a bill passed by Democrats in the end, despite public sentiment and regardless of whether it has a government plan or not, because there is no way the White House wants their fate to be the same as Hilary’s attempt in ’94 that failed oh-so miserably.