Customs duties Customs duties: What's this about?
If you just look at the long-term price trend, then a forecast of the US stock market is not a problem at all: it is going up.
However, the valuation would be a little too superficial, because the trade war between the USA and China is expanding more and more. Each of the quarreling parties tries to outdo the other side with punitive tariffs. And let's not forget: the United States and China are the largest economies in the world.
An economic recession would affect not only the two nations, but the whole world. After the two countries have already covered each other with import cells of $ 50 billion, the next step came on Thursday evening from Donald Trump. He ordered punitive tariffs on imports of China totaling $ 100 billion. The dispute is now escalating completely. China reacted promptly and promised: "We do not want a trade war, but we also do not fear such a war." The Chinese then announced that they were preparing new import tariffs on US goods.
These are not good prospects, especially when you consider that the US President is always ready for conflict. With his big ego, he will not compromise. It is already clear that neither nation can emerge victorious from the conflict.
A look at the structure of the US stock market
With the Advance Decline Line ( ADL) the difference between the rising and falling shares is calculated. Basically, every movement of the index should be confirmed by the indicator. If there is no confirmation, this means that the majority of the shares behave differently.
Picture: Daily chart of the Dow Jones Industrial with the Advance Decline Line (30 shares)
The ADL shows a slight bullish divergence
If you compare the price performance of the Dow Jones Industrial Index with its ADL, you can see that the ADL shows a tendency towards a bullish consolidation phase. Both graphs contain a simple moving average of 100 periods. While the price has penetrated the GDL100, the ADL has not even touched its average.
Conclusion: The small downward movements in 2018 did not support most of the Dow Jones shares. Overall, this results in a bullish consolidation pattern. As a result, the stock market has not yet been influenced by the trade war.
Trend analysis of the largest Dow Jones companies
Short-term = trend analysis of the past 40 daysMid-term = trend analysis of the past 40 weeksLong-term = Trend analysis of the past 40 monthsTrends Name short-term medium-term long-term AppleflatlonglongGeneral ElectricshortshortshortIBMflatflatflatJohnson & JohnsonshortflatllongMonglongflatllongMonglongflatlons 111> Table: Dow Jones Mighty
In the table above, the trends from three different time frames are considered. Two of the companies are showing a pronounced upward trend that should continue in the coming months. At the opposite end, only General Electric shows that the stock is a short candidate.
The rough trend analysis suggests that there won't be any major surprises in the next six months. The US stock market is likely to move into a volatile sideways market.
Buy UnitedHealth Group stock?
UnitedHealth is the top dog among American insurers. The company has been listed in the Dow Jones Industrial Index since 2012. With sales of $ 204 billion in 2017, the insurer is one of the world's largest companies. UnitedHealth offers various types of insurance. Services in the health insurance area are the main focus.
Insurance companies will experience increased rationalization in the next ten years. This was promised by the head of UnitedHealth, CEO David Wichmann, on the US broadcaster CNBC. Networking with the cloud and data exchange in a wide range of insurance areas brings great rationalization potential. Artificial intelligence makes medical diagnoses more precise and healthcare billing more effective. Development is still at the very beginning. UnitedHealth assumes that both a cost reduction and an improvement in customer service will be possible.
In the past few years, UnitedHealth has achieved a large increase in value. If one assumes the future framework conditions, then there is no end in sight. Even a trade war shouldn't hurt the UnitedHealth stock, because the healthcare sector is exempt from punitive tariffs.
A large insurance company is to a large extent always an investor in the financial market. The insurance premiums must earn interest in order to compensate for inflation tendencies. With a key interest rate of almost 0%, investing is a difficult task. Now that the Fed has ushered in the turnaround in interest rates, it can be assumed that interest rates will continue to rise slightly in the coming years. This will be an advantage for all investors. This is a great relief for UnitedHealth, because it is easier for insurers to achieve low-risk returns with fixed-income securities.
Financial data from UnitedHealth
It is rare to find a large company with large annual increases in sales and profits. UnitedHealth provides proof that it is possible. Revenues and profits have almost doubled in just over five years.Years201420152016201720182019Revenues130500157129184885201168224544243888Result before St.96561023111863140231623617908KGV182022211816
for $ In 2018, estimates are
Technical starting point for UnitedHealth shares
The share is moving in an impeccable upward trend. There was a small wave of sales at the end of January, but this was caused externally. It affected all insurance companies. Amazon, Berkshire Hathaway and JP Morgan Chase have announced that they are planning to start a new insurance company. It is especially about the employees and their health insurance. The aim is to be able to offer cheap health insurance. The three companies shocked the entire health insurance industry with the idea. In the short term, UnitedHealth therefore had to accept its own price losses.
If the project is examined closely, doubts regarding the competitiveness can arise. None of the three companies is experienced in health insurance. It may be that the three companies can create great capital power, but asserting themselves in a mature industry is anything but easy.
Image: UnitedHealth weekly chart Share in US dollars
The upward trend dominates the course of the price
The price trend shown does not quite reflect the complete upward trend. Although the price gain has been impressive since 2016, a long-term chart shows a huge trend movement. In 2009, the stock was $ 20. This means that the share price increased twelve-fold in less than ten years. UnitedHealth generated the enormous growth with the help of targeted company takeovers.
The upward trend has been constant since 2016. There were hardly any cheap entry points for a trader because the price was just going up. The January correction mentioned above could now offer a good opportunity to buy the stock at an attractive price.
The trend channel shows the future?
The trend channel drawn in encloses the trend in an almost perfect way, The bottom of the trend channel was a good entry point several times, because from there, the course always continued in line with the trend. It can be assumed that the downward wave caused a mini sell-out and that the bears are exhausted in the short term. This is not uncommon when short-term investors take profits. This would clear the way up again.
Exchange trading information
UnitedHealth Group shares: WKN: 869561 or US symbol UNH
Target price: $ 270
Interim target: $ 250
Stop loss: $ 188
If you want to benefit from the short-term stock recommendation, you can buy the stock directly or work with derivatives. Note that derivatives include leverage and therefore increase the profit and loss potential. In extreme cases, a total loss is even possible.
Stop loss: The stop loss is initially set as an initial stop and has the function of a maximum Loss limitation.
Price target: The price target is the exit point for the forecast market movement.
Interim target: When the intermediate target is reached, the position is in profit. At this point we take a partial profit and we sell 50% of our position. At the same time, the stop loss is adjusted to the personal entry price. This enables us to close our position without loss, even if the market later turns against us.