UNH - Cigna: Sentiment And Fundamentals On Their Side

2023-12-21 08:00:00 ET

Summary

• Lyn Alden recommends Cigna as a preferred fundamental investment due to its attractively-valued PEG ratio.
• UnitedHealth is the market leader but trades at higher valuations compared to Cigna.
• Our analysis suggests that both Cigna and United Health are projected to continue higher in 2024.

By Levi at StockWaves; Produced with Avi Gilburt

We're going to briefly discuss what sentiment truly is and how it moves markets. Also, Lyn Alden provides us with some compelling data regarding the fundamental picture for Cigna (CI). There is some bonus coverage of UnitedHealth (UNH) as well. Here we go!

The Fundamentals Snapshot With Lyn Alden

Lyn shares her views with us regarding companies across multiple sectors of the marketplace. Predictably, there will be some that stand out more than others as viable investments. When she identifies these opportunities, we are then able to mesh the technical picture via the structure of price on the charts to find high-probability setups. This is what we have with CI at the moment.

"CI continues to be one of my preferred fundamental investments. It's one of the relatively rare large cap stocks with a dividend-adjusted price/earnings/growth "PEG" ratio of below 1, which is attractively-valued." - Lyn Alden

As a bonus, Lyn has also provided her current view for United Health. We will discuss this a bit more below.

"UNH is the market leader and with a longer dividend track record, but trades at much higher valuations. Investors pay nearly twice the earnings multiple for a similar level of growth. Despite the difference in equity value pricing, the stocks have the same S&P bond credit rating of A-." - Lyn Alden

The Technicals Agree

When we use the phrase "the technical picture" or "viewpoint", you may envision or recall terms that are frequently used to describe traditional technical analysis. While some of these indicators can be overlayed onto charts as guides, we have yet to find an analysis methodology that can also provide context to the market or to a stock as Elliott Wave Theory does.

This context is shaped by the fact that markets are fractal in nature. These patterns will repeat at all degrees of the structure. This is what gives Elliott Wave Theory its power and predictability.

Obviously, this theory must be correctly applied. For just a moment, consider the possibility that this methodology may be of some use to you. Set aside, if you will, preconceived ideas or possibly even some bad experiences with prior practitioners of this theory. We will delve a bit deeper in the conclusion of this article. Let's discuss how this can help us in CI and UNH.

From this chart shared by Garrett Patten, you can see that we are anticipating the price to pull back correctively into support. That area is basically 272 - 284. The projections above are based on the low at 254 holding going forward. Should price continue directly higher from here rather than pulling back into the 272 - 284 area, it may open up the possibility of a larger wave circle 'i' or that wave circle 'ii' has already been completed.

The bigger picture projects higher into 2024 with price reaching perhaps as high as the 400 level from here. Our view would shift should price instead move back below 240.

You can also see how the zoomed-in view recently posted by Zac Mannes helps us view the near-term detail and the pullback discussed above. The basic takeaway for CI is that for as long as above 240, the price should continue higher into next year. However, this does not mean that we blindly set that projection and blithely assume it will be fulfilled. Remember that markets are non-linear, fluid and dynamic in nature.

As the price advances and the structure of the price fills in on the chart, we will update the subwaves that tell us when the turning points are more likely to take place and then we will show new support and resistance levels. This is one of the strongest features of our methodology. The user is constantly provided with updated levels that guide risk vs reward.

Here's the view for UNH:

In a similar fashion, the price is projected to continue higher in 2024. The subwaves appear to have two possible likely paths, as Garrett shows here. Should the price move below 472, that would be a near-term warning that a further corrective move would be unfolding instead.

Sentiment And Markets

Avi Gilburt has written in-depth articles where he shares the multiple studies and data points collected over years of research. These have been synthesized into understandable and actionable information for our readers. Here's an excerpt from one of those pieces:

"If you are interested in a methodology which will open your minds and eyes as to how markets really work, then let's move right into the overview.

Back in the 1930's, an accountant named Ralph Nelson Elliott identified behavioral patterns within the stock market which represented the larger collective behavioral patterns of society en masse. And, in 1940, Elliott publicly tied the movements of human behavior to the natural law represented through Fibonacci mathematics.

Elliott understood that financial markets provide us with a representation of the overall mood or psychology of the masses. And, he also understood that markets are fractal in nature. That means they are variably self-similar at different degrees of trend."

(you can read Part One of this 6-part series starting here )

Conclusion

Yes, there are nuances to the analysis. Once familiar with our methodology, our members discover a powerful ally on their side to provide guidance and risk management in their trading/investing.

There are many ways to analyze and track stocks and the market they form. Some are more consistent than others. For us, this method has proved the most reliable and keeps us on the right side of the trade much more often than not. Nothing is perfect in this world, but for those looking to open their eyes to a new universe of trading and investing, why not consider studying this further? It may just be one of the most illuminating projects you undertake.

(Housekeeping Matters)

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