Anthem Inc (ANTM) is one of the biggest players in the health insurance market in the United States. They have a strong choice of products as customers want control over their own their health care decisions as well as being served by healthcare professionals.
The company has a strong reputation for innovation and has strong relationships in health-insurance, with physicians, hospitals, and health care clinicians.
The world’s population in developed nations is aging, and trends show this trend is not going to change any time soon. Companies involved in health-insurance businesses should thrive if the client-company relationship is strong. Anthem seems to be such a company.
Anthem makes a vast majority of its income from the United States. This means the value of the US dollar does not influence the company’s reports that much. Nevertheless, the monetary policy in the United States will have an impact on the end customer, and maybe even a direct impact on the company’s reports. The more disposable income a family has, the more likely the appetite for spending increases, and this has a lot to do with monetary policy.
Speaking of the monetary policy, it seems that the Fed has cornered itself into a situation in which it is forced to keep low rates, that is unless the CPI (inflation) shows signs of bouncing. The Fed in the United States has a dual mandate, and while one is reached (job creation and low unemployment rates), the other; inflation, is still missing.
The company’s shares almost tripled in the last two years as a jump from $60 to almost $180/share has been made in an almost straight line. This definitely has to do with the quantitative easing programs that were running in the United States. After the tapering, the stock continued to rise.
From a technical point of view, I would say the lower move from the $167/share high is a corrective one and the 150 level should be a pivotal one for any continuation pattern that goes higher.
Based on both the industry’s potential as well as on the psychological 150 level, I am favoring a call option from the 151 level with a one-month expiration date.
Chances are that the market is going to form here some kind of a corrective structure, ideally, a triangle that will act as a continuation pattern. While it is good to know exactly what the pattern is, chances are it will be a bullish one, hence the call option.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
