Option Investor
Market Updates

I don't believe it myself!

Printer friendly version

Subscriber e-mail show that they too are somewhat "surprised" if not impressed by the performance of many HMO stocks as depicted by individual stocks they've traded and are trading from the bullish side as the HMO.X gains another 2.6% today and sets yet another all-time high.

While that's impressive, wait until you get a load of this. Several weeks ago we alerted bulls to a potential eruption in the Morgan Stanley Health Provider Index (RXH.X) and that move has been equally impressive. What I've had to do today is "roll up retracement here to identify some potential levels of resistance.

RXH.X Chart - Daily Interval

Almost like "domino theory" as outlined in the past, the RXH.X has caught some "bull fever" and now break out to a new relative high, but still below its all-time highs dating back to April 1998 of 428. While some see this group of stocks as "overextended" on its charts, the laws of supply/demand have one also wondering who's going to be a seller with the gains seen from the HMO.X as it too has appeared "overextended." We know however with proper trade/account management, a trader that is willing to leg into positions and buy some time can do quite well. While the above chart shows "fitted retracement" which results in a 100% retracement up at 407.47, that turns out to be pretty close to the 405 level that we get from the bullish vertical count from the point and figure chart.

Sector components for the RXH.X are (APH, CYH, HCA, HCR, HMA, HRC, LNCR, LPNT, OCR, RCGI, SRZ, THC, TRI, UHS).

Jeff Bailey
Senior Market Technician
Option Investor

Intraday Update Archives