HMS Holdings Steady, But No Real Strength

• Juan Carlos Arancibia
• On 6:09 pm EDT, Monday October 5, 2009

As HMS Holdings works on a base, two opposing forces are battling it out.

On the plus side, the stock is trading tightly. That suggests HMS is favored by some institutional investors, who are keeping its share price steady through consistent buying.

But while the price action is encouraging, the base has shown tepid evidence of accumulation.

Since the week of July 24, when the correction began, HMS has yet to notch a single up week in above-average volume. Instead, it suffered two weeks of selling in big trading.

That's normally a sign of institutional selling, although the week of July 31 closed with the stock in the upper 60% of its price range. That indicates some institutions bought shares to arrest the stock's decline, and therefore could be interpreted as accumulation in the base.

Meanwhile, HMS has met up against resistance at its 10-week moving average. The relative strength line is lagging sharply.

The base has some work to do, so perhaps stronger signs of accumulation will develop before HMS breaks out.

HMS works with government health care programs, mostly Medicaid, to make sure claims are paid correctly. Medicaid enrollment is up as more workers lose their jobs.

Buzz up!