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Show me the supply

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If you believe in the relationship between supply/demand and price action, then you'll want to keep an eye on shares of Oxford Health (NYSE:OHP) $40.95 +3.22% as the stock breaks to a new 52- week high. Who's going to sell? Institutions that "loaded the boat" on the gap higher near $35? Or the institutions that "loaded the boat" on the recent pullback at $36? At $40.97, the stock is up 17%. I'm thinking somebody has a target much higher than current levels with volume having spiked near the 4-million share range in recent months on two occasions. Both volume spikes have seen price move higher, hinting that demand is winning out on a longer-term basis.

Oxford Health Chart - Daily Interval

OHP broke to a 52-week high in the past 15-minutes and my "fitted" retracement technique would have a near-term resistance level near $42.22. Over time, a trader can test the stock against these levels of retracement. In January, we calculated the bullish vertical count for OHP from the p/f chart as bullish to $71. Retracement has been set more conservatively to the $54.08 level to give us some levels to measure against on a more near-term basis.

HMO Index Chart - Daily Interval

The HMO Index (HMO.X) looks very similar to the chart of Oxford Health (OHP). An OHP bulls is looking for some sector participation to help create a tidal wave of bullishness. It's always favorable to have the bulk of sector stocks moving with you as it can help extend bullishness.

Believers in supply/demand know that the bulk of selling comes from bulls taking profits, or old bulls cutting losses. With OHP and the HMO.X trading back at 52-week highs, the bulk of selling should be more limited to the selling of gains. This helps create a more favorable supply/demand scenario for bullishness going forward and put the odds in the favor of bulls.

Jeff Bailey
Senior Market Technician
Option Investor

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