Stocks have temperaments. They either fold under pressure or
With the market in correction, this is an excellent time to
see how a stock reacts to a little adversity.
Health care benefits providerAetna (
) is consolidating around its 10-week moving average in a
The stock is in the fourth week of a consolidation that could
turn into a stage two, flat base.
Let's look at the recent action week by week.
In week one, the stock fell about 2% in 33% faster volume. The
weekly close, though, was in the upper half of the range. Coupled
with the strong volume, the high close was a sign of
In week two, the stock rose 0.5% in light volume. The close
also was high, but most notable was the tight trading range.
Tight trade is constructive whether you measure it from week to
week or from high to low within the week. Aetna had both.
The third week involved a 3% loss, which took it below the
10-week line. This wasn't ideal, but volume was 35% below
average. The low volume showed big money wasn't panicking.
This week Aetna is trying to regain its 10-week line. Volume
has been quiet.
The stock, which was No. 17 in this week's Big Cap 20, grew
earnings 12% and 16% in the past two quarters on revenue gains of
7% and 31%.
Three things accounted for the 31% jump in revenue: higher
health care premiums, growth in Medicare membership and the
acquisition of Coventry Health Care.
The Street expects EPS to grow 15% this year on a 33% pop in
The annualized dividend yield is 1.3% vs. 2.51% for the