For his "Executive Decision" segment of Mad Money Wednesday night, Jim Cramer sat down with Michael Neidorff, chairman and CEO of Centene Corp. (CNC) the health plan provider with shares that lost 1% after the company posted a six-cents-a-share earnings beat with revenues up 29% year-over-year. Neidorff said he didn't understand the market's reaction to the quarter, as his company beat on every line item this quarter. He reminded investors that Centene's stock will be splitting 2 for 1 starting Thursday.
When asked about the mood in Washington, Neidorff said they remain very active in Washington, promoting the message that we need to move the conversation from politics to sound policies that will benefit the American people. He said the single-payer systems proposed by some in Washington are simply too expensive for our country to afford.
With the stock split a fresh look at the split adjusted stock is now in order as support and resistance areas will be changed.
In this daily bar chart of CNC from Bloomberg L.P., below, we can see that prices are back below the declining 50-day simple moving average line and below the still rising 200-day line.
Unless prices can quickly rally back above the 200-day line we could see a retest of the December lows in the weeks ahead. Key support is now around $55 with resistance above $65.
In this weekly bar chart of CNC, below, we can see a mixed picture. Prices are below the cresting 40-week moving average line.
The weekly OBV line shows a peak in January as it stalled just below the prior August peak.
The Moving Average Convergence Divergence (MACD) oscillator is below the zero line in bearish territory but it has narrowed. A bullish crossover to a cover shorts buy signal may develop if prices rally, however, renewed weakness in the price of CNC will likely postpone a positive crossover.
Bottom line strategy: CNC declined on what appears to be bullish news. Traders must be looking ahead and have turned more defensive. Don't argue with the marketplace.