UHS stalls at $110, again

Universal Health Services, Inc., through its subsidiaries, owns and operates acute care hospitals, behavioral health centers, surgical hospitals, ambulatory surgery centers, and radiation oncology centers. The company’s hospitals offer various services, including general and specialty surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, pediatric services, pharmacy services, and/or behavioral health services.

Take a look at the 1-year chart of Universal (NYSE: UHS) below with my added notations:

UHS rallied nicely from April up until September before starting to trend lower into November. Since that November low, UHS has steadily rallied higher. Twice over the last 2 months the stock has resistance at $110 (blue), and that $110 has been a key price in the past as well. A break above $110 should mean a run back up to the 52-week high resistance at $115 (red).

The Tale of the Tape: UHS has a key level of resistance at $110. A long trade could be entered on a break through that level. However, if you are bearish on the stock, a short trade could be made on any rallies up to $110.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

@cmtstockcoach