For his second Executive Decision segment of "Mad Money" Tuesday, Jim Cramer spoke again with Michael Neidorff, chairman and CEO of Centene Corp. (CNC) , a health plan operator that saw its shares rally Tuesday after it reported another strong quarter.
Neidorff said you need scale in the healthcare business, and Centene now has the scale it needs to deliver on all its promises. The company had a clean quarter, he said, and is beginning the value recognition phase of all its past investments.
One of those investments has been the addition of artificial intelligence to take over monotonous tasks such as pre-authorizations, Neidorff said. He noted that it takes a nurse 18 minutes on average to review a patient's chart and authorize a procedure. Centene's new AI system does the same task in a single second.
Let's check on the pulse of Centene's charts.
In this updated daily bar chart of CNC, below, we can see that prices have rallied in recent days. We can see potential chart resistance in the $72-$75 area from June and July. With prices going vertical in the last few days and with resistance overhead I would not chase this rally. Prices are above the popular moving averages and the On-Balance-Volume (OBV) line has improved this month. The Moving Average Convergence Divergence (MACD) oscillator has crossed above the zero line for an outright buy signal.
In this weekly Japanese candlestick chart of CNC, below, we can see that CNC has been making higher lows from 2019 and equal highs in the $75 area. This is a large and potentially powerful pattern if there is a successful upside breakout.
In the daily Point and Figure chart of CNC, below, we can see that prices have reached an upside price target of $70. Technically oriented traders may be inclined to take profits.
In this weekly Point and Figure chart of CNC, below, we can see an upside price target of $92 but a weekly trade at $75.96 is needed for a breakout.
Bottom line strategy: I am in no rush to go long CNC and I do not want to anticipate its next move. However, I will recommend a purchase on a breakout over $76.