HMS Holdings Corp. (NASDAQ: HMSY)

HMS Holdings Corp. provides cost containment services to government and private healthcare payers and sponsors. The company’s services include co-ordination of benefits and program integrity services. Its co-ordination of benefits services provide cost avoidance services that offer validated insurance coverage information, which is used by government-sponsored payers to co-ordinate benefits for incoming claims; and program integrity services identify improper payments on a pre-payment and post-payment basis, identify and recover overpayments, detect and prevent fraud and abuse, and identify process improvements. It serves state Medicaid agencies; the centers for Medicare and Medicaid services; commercial health plans, including Medicaid managed care, Medicare Advantage, and group health lines of business; government and private employers; Pharmacy Benefit Managers; child support agencies; the Veterans Health Administration; and other healthcare payers and sponsors.

Please take a look at the 1-year chart of HMSY (HMS Holdings Corp.) below with my added notations:

1-year chart of HMSY (HMS Holdings Corp.)

HMSY has a very important price level at $26 (navy) that has been both support and resistance over the last (6) months. The stock also has a clear lower level of support at $22 (blue). In between those levels you can see that $24 (red) is not an uncommon area of support or resistance either. So, in addition to showing clear levels of support/resistance, HMSY is also showing you that it tends to react to each $2 increment.

The Tale of the Tape: HMSY is currently trading between its $24 and $26 levels. A long position could be entered at $24 or on a break above $26 with a stop below the level of entry. If HMSY breaks below $24, another long play could be made at $22. If you are looking for a short trade instead, a break below $24 would provide you with that opportunity.

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Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT