For his second "Executive Decision" segment of Mad Money Wednesday night, Jim Cramer spoke with Kevin Sayer, chairman, president and CEO of DexCom (DXCM) , the glucose monitoring company with shares that dipped 4.2% after the company's investor meeting.
Sayer said that DexCom is more bullish than ever about their business. What some analysts called a "guide down" Wednesday was merely a conservative approach to changing market dynamics and accelerants. When asked about the criticism that DexCom is lowering prices, Sayer explained that they are continually adjusting their prices as they expand into new channels.
Sayer also responded to the six-month delay in testing their next generation monitoring system. He said that everything their G6 models do, the new G7 models do better.
Let's check out the charts and indicators of DXCM.
In our review of DXCM on October 29 (https://realmoney.thestreet.com/investing/go-slow-on-any-dexcom-purchases-for-now-15475308) we wrote that "DXCM has been "rolling over" since May so the risk is that there has been a fair amount of liquidation (selling) and a bigger decline is possible. I would put DXCM on the shopping list and wait and see how things develop."
In this updated chart of DXCM, below, we can see prices have gone nowhere since the end of October, but the technical picture has weakened in my opinion. Prices are trading below the declining 50-day moving average line and below the cresting 200-day moving average line. We can see that the 50-day line has crossed below the slower-to-react 200-day line for what is commonly called a dead or death cross. This mechanical sell signal is typically late but can be effective in long-trending markets.
The On-Balance-Volume (OBV) line is on the defensive and its decline tells us that sellers of DXCM have been more aggressive with heavier trading volume being seen on days when DXCM has closed lower.
The Moving Average Convergence Divergence (MACD) oscillator has been weakening since May and is under the zero line and just showing a new cover shorts buy signal.
In this weekly bar chart of DXCM, below, we see a bearish picture. Prices are below the topping 40-week moving average line.
The weekly OBV line shows a slow pattern of softness since May.
The MACD oscillator is moving below the zero line now for an outright sell signal.
In this daily Point and Figure chart of DXCM, below, we can see a potential downside price target in the $263 area. This would roughly be a 50% retracement or correction of the rally from $125 to around $450.
Bottom line strategy: Investors continue to be more aggressive sellers of DXCM, and the charts and indicators point to further declines in the months ahead. Avoid.