Centene Still Looking Bullish

 | Sep 13, 2017 | 10:15 AM EDT
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The last time we reviewed the charts of Centene (CNC) we were positive on the stock, writing: "This recent upside breakout from this broad sideways zone gives us a long-term target of $98. A close below $68 would upset this bullish outlook and get us to head to the sidelines."

With prices now up at $91 a share, our $98 price target does not seem all that far away. Let's drill down on the latest charts to see if any adjustments to our strategy are needed.

In this daily bar chart of CNC, above, we can see that the rising 50-day moving average line is still intact. In August there were two successful tests of the positively sloped 50-day average. The 200-day moving average line is also in a bullish set-up.

The pace of trading looks like it has slowed since late June, but the daily On-Balance-Volume (OBV) line has continued to trend higher, signaling more aggressive buying. The Moving Average Convergence Divergence (MACD) oscillator is in a bullish mode, rising from above the zero line.

In this weekly bar chart of CNC, above, we can see the rally from the November low. We can see that prices are above the rising 40-week moving average line. The weekly OBV line has been going up since November, but at this moment it has not made a new high to confirm the new price highs.

This bearish divergence may straighten itself out in short order, but right now I am watching it. The MACD oscillator on this timeframe is also bullish.

In this Point and Figure chart of CNC, above, we can see the rally from August (look for the "8" on the chart) and a slightly higher price target now of $99.

Bottom line: the $85-$80 area should act as nearby support if prices corrected, so longs should consider raising sell stops to $79 from $68. The $98-$99 area is still our price target.

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