Ride the green wave to $800 $UNH Elliott Wave Analysis of UNH on Monthly Chart
Elliott Wave Theory posits that stock price movements follow a predictable wave structure, typically broken down into five impulsive waves (1, 2, 3, 4, and 5) in the direction of the primary trend, followed by a corrective wave pattern (A, B, C) that moves against the trend. Identifying the current wave for UNH on a monthly chart allows us to make projections for the next potential targets.
Current Wave Structure Analysis
Wave 1 (Start of the Bull Market):
The initial wave (Wave 1) likely began during a period of recovery, typically marking the start of a longer-term uptrend for UNH. This initial move sets the foundation for the subsequent waves.
Wave 2 (Corrective Phase):
After Wave 1, a corrective move (Wave 2) generally retraces a significant portion of the initial rally, often around 50%–61.8% according to Fibonacci retracement levels, before finding support and resuming the primary uptrend.
Wave 3 (Strongest Impulse Wave):
Wave 3 tends to be the longest and most powerful wave in the Elliott cycle, often experiencing a price increase of 161.8% or more relative to Wave 1. UNH experienced significant growth in this phase, with accelerated price movement, driven by robust fundamentals and growth in both the UnitedHealthcare and Optum segments.
Wave 4 (Consolidation):
The stock may currently be consolidating in Wave 4, which is typically a corrective or sideways movement, allowing the stock to "catch its breath" before a potential final rally in Wave 5. Wave 4 corrections are often shallow, retracing 38.2% or less of Wave 3’s movement and providing a setup for the final impulse.
Wave 5 (Potential Target Zone: $800+ Level):
If UNH is indeed in the latter part of Wave 4, the upcoming Wave 5 could be the final leg in this uptrend. Wave 5 generally aims to surpass the high of Wave 3, often aligning with Fibonacci extension levels, such as 100% or 161.8% of the length of Wave 1.
Targeting $800 with Fibonacci Extensions
Using Fibonacci extension levels can give us specific price targets within Wave 5:
Primary Target Zone:
100% Extension of Wave 1: This level often serves as the initial target for Wave 5, potentially placing UNH within reach of the $750–$775 range.
Secondary Target Zone:
161.8% Extension of Wave 1: If Wave 5 proves to be a stronger rally, it could extend further, targeting the $800+ range, potentially even higher, depending on market momentum.
Alternate Scenario - Extended Fifth Wave:
In some cases, a fifth wave can extend more significantly if momentum builds in the final stages. In this scenario, UNH could surpass $800, although such extensions are less common and would depend heavily on continued fundamental support.
Supporting Momentum Indicators
RSI and MACD Divergence: Momentum indicators such as the RSI and MACD can signal wave exhaustion. If these indicators diverge (showing lower highs while price hits higher highs), it could signal the end of Wave 5.
Volume Analysis: Volume spikes often accompany the end of impulsive waves, so increased trading volume around the $800 level may indicate that the wave is approaching completion.
Summary
Current Position: Likely in Wave 4 consolidation or early stages of Wave 5.
Primary Target: $750–$775 (100% extension of Wave 1).
Secondary Target: $800+ (161.8% extension, depending on momentum).
Risk Factors: Watch for momentum divergence and volume spikes, which could signal a peak in Wave 5.
This analysis aligns with the potential for UNH to reach $800 in the coming months, assuming the Elliott Wave structure remains intact.
Strong Financial Performance and Earnings Growth
UNH has consistently posted strong financial results, outpacing many peers in the healthcare sector. Its latest earnings reports have shown impressive revenue and profit growth, attributed to both organic expansion and strategic acquisitions. Key performance metrics to support an $800 price level include:
Revenue Growth: UNH’s revenue is projected to grow at a stable rate due to increased healthcare spending, particularly in Medicare and Medicaid, as well as continuous innovations in service delivery.
Earnings Per Share (EPS) Growth: EPS has seen a consistent increase over the past years, supported by margin expansions in the UnitedHealthcare and Optum segments.
Profit Margins and Cash Flow: With robust cash flow and prudent cost management, UNH has been able to invest in technology, expand healthcare services, and maintain shareholder value through dividends and share buybacks, all factors supporting stock price appreciation.
UnitedHealth Group’s Upcoming Investor Conference
UnitedHealth Group (UNH), a global leader in healthcare services, is expected to host its annual Investor Conference in late November 2024. This highly anticipated event will bring together investors, analysts, and industry experts to discuss UnitedHealth Group’s strategic growth priorities, recent performance, and outlook for 2025.
