$UnitedHealth(UNH)$ $Alibaba(BABA)$ $SPDR S&P 500 ETF Trust(SPY)$ Iโm fully convinced $UNH is setting up for one of the most asymmetric upside trades of the year. With Berkshireโs stake anchoring conviction, Congressional buys lighting the fuse, shorts overloaded, and fundamentals stabilizing, this looks less like a recovery and more like a full-scale rerating.
๐งฎ Discounted Cashflow Conviction
Iโve run the DCF, and the result is decisive. Equity value per share comes in at $580.03, nearly 70% upside from here. Present value of the next decade of cashflows plus terminal value makes the current market price deeply disconnected from intrinsic worth. At an 8.5% discount rate, this isnโt a guess, itโs math.
๐ Technical Setups Aligning
On the weekly chart, the wedge structure mirrors prior inflection zones. Historically, $UNH has launched 100%+ rallies after similar decade-long compressions, and the current formation projects a comparable expansion. The 30-minute and 4H Keltner/Bollinger expansions show fresh momentum breaking out of compression.
Crucially, thereโs an open gap above $360 that traders are eyeing for a near-term fill. For execution, the base case is holding the $320 reclaim with near-term upside into $360โ$375. A break back below $310 would weaken the setup, but as long as higher lows are preserved, the roadmap to the 200W MA stays intact. Momentum traders can lean into the gap fill while swing traders track the wedge breakout toward the longer-term levels.
๐ Base, Bear, and Bull Scenarios
โข Base Case (55%): Consolidation above $320 drives a measured push to the $360 gap fill, aligning with the DCF anchor. This remains the most probable outcome given technical compression and fundamentals.
โข Bear Case (15%): Breakdown under $310 opens risk to retest $280; downside only activates if October star ratings disappoint or DOJ overhang intensifies. Low probability, but still a risk worth tracking.
โข Bull Case (30%): A clean gap fill at $360 accelerates momentum into $400โ$420 by year-end, with the 200W MA above $450 as the stretch target. Historical expansions plus short-covering fuel make this outcome more likely than bears are pricing in.
๐ Short Data Fuel
Short interest sits at 10.87M shares, ratio 11.82%, with days-to-cover hitting 4.29. Thatโs tinder for a fire. Daily short volume spikes in July and September followed by a sharp price recovery signal a bear trap in motion. This is a classic setup for a mother of all short covers.
๐ฆ Institutional Flows
Buffettโs Berkshire 13F shows 2.45M shares worth $764M. Tepperโs $BABA haul delivered him +500M profits; I believe $UNH is next in line for institutional rerating. When capital of this magnitude positions, itโs not a trade, itโs a statement.
โ๏ธ Policy & Star Ratings Catalyst
Fresh filing: UnitedHealth expects ~78% of Medicare Advantage members in 4-star or higher plans for 2026, aligned with historical performance. Analysts flagged this as โbetter than feared,โ and it unlocks billions in bonus payments. Leadership also confirmed plans to reaffirm FY25 adjusted EPS guidance of $16+, removing a key overhang.
In parallel, a new bipartisan House bill (H.R.5145) would extend ACA premium tax credits through 2026, removing a major policy overhang. ACA exchange revenue is only 3โ5% of UNHโs total ($10โ20B), yet the political risk has discounted the whole multiple. UNH has filed +26% rate hikes for 2026 plans to defend margins if subsidies lapse, with regulators set to finalize by October 2025. Extension of subsidies plus stabilized ACA pricing could underpin $26+ EPS and $25B FCF, supporting $17B in shareholder returns.
๐งจ Political Tailwind & Insider Signals
Congressional dip-buying added fuel: both Marjorie Taylor Greene and Tim Moore disclosed purchases in early August. Since then, MTGโs trade is already up +32.89% while Mooreโs is up +27.65%, massively outperforming SPYโs +2โ3%. These werenโt random moves; they aligned with one of the sharpest reversal zones in recent memory.
โก Sentiment Reset & Management Context
Returning CEO Stephen Hemsley is signaling stability. The Amedisys acquisition brings near-term modest EPS dilution from integration costs but adds strategic reach in home health. DOJ and HHS investigations tied to the Change Healthcare cyberattack remain, but the street is already reframing this as โpriced in.โ
Forward EPS estimates have collapsed from ~$7 in Q1โ25 to ~$4 in Q2โ25, with Q3 and Q4 now sandbagged to $3.09 and $2.27. This reset fits Hemsleyโs long-standing playbook: underpromise and then overdeliver. With the bar now set so low, any positive surprise in earnings or star ratings could trigger an outsized upside reaction. Relief rallies are built on precisely these resets.
๐ Strategic Outlook
Medicare Advantage remains the engine, star ratings defend margins, and institutional ownership adds ballast. Combine Buffettโs conviction, Congressional dip-buys, and a loaded short base, and the result is asymmetric risk/reward skewed heavily to the upside.
๐ก Conclusion
Iโm not just watching, Iโm acting. $UNH has the DCF math, technicals, gap fill setup, short squeeze fuel, and institutional tailwinds converging. The return to the 200W MA isnโt a pipe dream, itโs a probability-weighted framework built on fundamentals, flows, and history.
๐โDo you see $UNH delivering the full bull case wedge expansion, or do you think we stall after the $360 gap fill?
๐ข Donโt miss out! Like, Repost and Follow me for exclusive setups, cutting-edge trends, and insights that move markets ๐๐ Iโm obsessed with hunting down the next big movers and sharing strategies that crush it. Letโs outsmart the market and stack those gains together! ๐
Trade like a boss! Happy trading ahead, Cheers, BC ๐๐๐๐๐
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