Health Insurance Stock Could Rebound Off Historically Bullish Signal

Elevance Health Inc (NYSE:ELV) stock yesterday enjoyed its biggest single-day percentage gain since May 2024 after reporting $547 million in profits, but it wasn’t enough to erase its worst day since March 2020 in the previous session, after the Centers for Medicare & Medicaid Services proposed to raise Medicare Advantage payment rates by only 0.09% in 2027. The good news is that this bear gap placed ELV near a trendline with historically bullish implications, which could help it trim its 14.2% year-over-year deficit.

Per Schaeffer's Senior Quantitative Analyst Rocky White, ELV is within 0.75 of its 100-day moving average's 20-day average true range (ATR), after remaining above it 80% of the time over the last two weeks, and 80% of the past 42 trading sessions. This signal has occurred another three times over the last 10 years, after which the stock was higher one month later each time with an average 5.7% gain. From its current perch, a similar move would place ELV back above $363.

The health insurance stock’s 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 99% of annual readings. This suggests an unwinding of pessimism could create tailwinds for the shares.

Options are also affordably priced, per the security’s Schaeffer's Volatility Index (SVI) of 33% that ranks in the 27th percentile annual readings. With a Schaeffer's Volatility Scorecard (SVS) of 71 out of 100, it also appears that ELV has tended to exceed option traders' volatility expectations during the last 12 months.