Trendline Test Stalls UnitedHealth Stock Rebound

The shares have muscled above their YTD breakeven mark

UnitedHealth Group Inc (NYSE:UNH) shares hit a year-to-date low near $208 on April 17, as concerns over potential policy changes sent the broader healthcare sector spiraling. The Dow stock has since recovered, last seen trading at $249.84 -- just a hair above its Dec. 31 close at $249.12.

Another close above here would mark the equity's second straight -- a feat not accomplished since late March -- while UNH is also pacing for back-to-back settlements above its 80-day trendline, which hasn't happened since before a Feb. 27 bear gap. Just above here, though, is the stock's 120-day moving average, a trendline that served as support for most of the fourth quarter, but has more recently served as a ceiling.

UnitedHealth options traders have been positioning for more upside. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 1.87 ranks in the 71st annual percentile, meaning calls have been bought to open over puts at a quicker-than-usual clip.

While it's likely some of this call buying has been at the hands of traditional bulls, it's also possible shorts have been hedging against any additional upside risk. Short interest on UNH surged 18% in the two most recent reporting periods to 6.59 million shares. This is still near historically low levels, though, and accounts for just 0.7% of the equity's available float.