In his Executive Decision segment of "Mad Money" Tuesday, host Jim Cramer spoke with Michael Neidorff, chairman, president and CEO of Centene Corp. (CNC) , a health plan provider.
Centene delivered beats on the top and bottom lines Tuesday for its first quarter and issued strong guidance but still saw its shares fall 7%. Neidorff said the market is fickle at the moment and investors were concerned over rising medical costs.
In our last review of CNC back on Nov. 25 we 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." How do the charts look this Wednesday morning? Let's check.
In this daily bar chart of CNC, below, we see what appears to be a large equilateral triangle formation that started back in September. Notice the lower highs and the higher lows? Trading volume does not seem to show any particular pattern since September but it seems to increase on some of the rallies.
The On-Balance-Volume (OBV) line declines from an early November peak and this says that sellers of CNC have been more aggressive for several months. The Moving Average Convergence Divergence (MACD) oscillator has been hugging the zero line since October, telling us that CNC has not displayed any sustained strength.
In the weekly Japanese candlestick chart of CNC, below, we can also see the triangle formation. The peaks show upper shadows as traders rejected the highs and the troughs show lower shadows only until September of last year. The more recent lows on the chart are not showing lower shadows and I think that is a tell of further price weakness. Prices are now below the flat 40-week moving average line. The weekly OBV line has been stalled for months. The MACD oscillator has been hugging the zero line.
In this daily Point and Figure chart of CNC, below, we can see that the software is projecting a potential downside price target in the $56 area.
In this weekly close-only Point and Figure chart of CNC, below, we see a tentative downside price target in the $48 area.
Bottom line strategy: The charts and indicators of CNC still do not convince me to become a buyer.
