On January 10th, I spent quite a bit of time talking about Oxford Health (NYSE:OHP) in the OptionInvestor.com 03:00 EST Update and then later that night in the premierinvestor.net Market Wrap. Suffice it to say I was bullish the stock longer-term based on the recent gap higher from a large base on BIG volume.
Today's 3% rise and bucking of the broader market action has once again gotten bulls attention and I'm getting inundated with e- mail on the stock and what to be doing here. I'm now going to turn from "longer-term" to shorter-term and discuss the technicals that a trader may be looking at.
First things first as I always like to do. Look at the big picture first, to better understand the near-term. As discussed the current column of X is still building the bullish vertical count column. As it is now, the longer-term vertical count is $65. If you're an options trader that took the option play as outlined for the August $35's, I wouldn't be in a hurry to sell.
One thing I did is went back to the chart of Oxford Health when it was trading on the NASDAQ under the symbol OXHP to find a relative high to anchor retracement from. Here's what I came up with and it looks like other market participants have done the same thing. Note today's high of $38.60, which is very close to our 80.9% retracement level. I'll will almost be willing to bet that today's action is some bears covering their shorts as they tried shorting the recent spike higher, feeling for sure that the broader market negativity would help them in their bearish cause. As we try and teach here.... try to short/put weak stocks, not strong stocks.
Oxford Health Chart - Daily Interval
Shares of Oxford Health (OHP) may be perceived as "boring," but this stock continues to surprise subscribers as the stock continues to build gains. Lots of OI subscribers took the longer-term approach and the August $35 calls. Shorter-term traders may look to trade for profits in the upper end of retracement. I do feel that traders and investors need to monitor a corresponding index like the Morgan Stanley Healthcare Index (HMO.X), which OHP is a component of.
Morgan Stanley Healthcare Index Chart - Daily Interval
The chart of the HMO.X is perhaps the "body" of the snake, which may well put shares of OHP at the head of that very snake. We're seeing sector participation from the corresponding index so still looks bullish. A short-term trader is most likely locking in gains near 80.9% retracement, while a longer-term investor goes to lunch with a smile on his/her face.
I will make note that the current bullish vertical count for the HMO.X is longer-term bullish to $565. OHP's longer-term bullish price objective is currently $65. Another stock we've mentioned as bullish from last week near $70 are shares of Unitedhealth (UNH), which carries a longer-term bullish vertical count of $91.
Please remember that bullish vertical counts can be exceeded, but may also not be met. It is a technique for assessing longer-term bullish price objectives and helping traders and investors better assess a stock potential upside to determine if the potential longer-term bullishness is there to warrant an investment.