Back on November 25 we looked at the charts of Centene (CNC) and wrote, "I can understand that companies can have bullish long-run fundamentals, but I have to deal with the charts as they present themselves here and now. CNC still does not look like a stock I want to buy at current levels."
The stock has struggled since late November and is testing its December lows. Let's visit with the charts again as the pull of gravity seems to be getting stronger.
In this daily bar chart of CNC, below, we can see that prices have made a number of upside attempts the past 12 months but all of them have failed. Prices have weakened so far this new year and CNC is retesting its December lows. A break to the downside is likely to precipitate further declines. The slopes of both the 50-day moving average line and the 200-day moving average line are negative.
The On-Balance-Volume (OBV) line has been in a decline from early November and tells us that sellers of CNC have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line and struggling to give a cover shorts buy signal.
In this weekly Japanese candlestick chart of CNC, below, we can see a number of upper shadows in the past several weeks. Upper shadows tell us that traders are rejecting the highs.
The 40-week moving average line is pointed down and the OBV line is slightly weaker since January. The MACD oscillator fell below the zero line in January for a sell signal.
In this daily Point and Figure chart of CNC, below, we can see a potential downside price target of $53. If CNC reaches $53 it will mean that the September low of the daily bar chart was broken and that event, should it develop, will be more bearish than breaking the December low.
Bottom line strategy: The charts of CNC are weak and vulnerable. Avoid the long side.
