Will This Support Level Hold For a Fifth Time?

The good news with price support holding four times is that we can say that buyers have consistently jumped in and supported a stock's price at that level.

The bad news is that support will eventually give way and, if it does, a selloff could accelerate very quickly.

Elevance Health (ELV) finds itself in exactly this position. A price support range of 490.00-500.00 has held successfully in early March, twice in April, again in late May, and now ELV once again is testing this support range:

Enter Elevance Health (ELV):

There are a number of mixed signals. Obviously, volume trends have turned extremely bearish as this past week's selloff has been accompanied by very heavy volume. However, we've also seen ELV lose much of its recent ground at the opening bell on gap downs. By the end of the day, buying resumes, which has resulted in an excellent AD line. This suggests accumulation and is clearly bullish. But ELV's relative strength up channel, in effect for roughly 9 months, has completely broken down. However, absolute price support has held.

One week ago, ELV posted excellent quarterly results, with both revenue and EPS surpassing consensus estimates. So the gap downs and big selling could be providing an excellent entry at or near price support. One thing is for sure: ELV needs to hold this price support, and any close beneath 490.00 would trigger a sell for me.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.