Centene Stock Still Isn't in the Pink

An analyst has reduced the rating on the healthcare stock to neutral, and its charts tend to support that decision.

I reviewed Centene Corp. (CNC) on Feb. 6 ahead of its fourth-quarter earnings and wrote that its "charts and indicators are weak and I would look for further declines in the stock price in the weeks ahead." Here on Thursday a major sell-side firm cut its fundamental rating on Centene to neutral, so let's take another look at the healthcare company from a technical perspective.

In this daily bar chart of CNC, below, I see a weak picture as prices remain in a downward trend. CNC trades below the negatively sloped 50-day moving average line and below the negatively sloped 200-day line. The trading volume has been more active since September but it has not produced a sustained rally, so I believe this is liquidation (selling).

The daily On-Balance-Volume (OBV) line has been in a decline since August and that tells me that trading volume has been more active on days when CNC has closed lower. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line and a long way from a buy signal.

 

In this weekly Japanese candlestick chart of CNC, below, I went back four years to show the rally from the middle of 2019. Prices have broken the four-year uptrend (not drawn). CNC trades below the declining 40-week moving average line. The weekly OBV line shows weakness from September to now. The MACD oscillator made an equal high in August for a bearish divergence and then quickly declined below the zero line for an outright sell signal.

 

 

In this daily Point and Figure chart of CNC, below, I can see a potential downside price target in the $65 area.

 

 

In this weekly Point and Figure chart of CNC, below, a downside price target in the $51 area is shown.

 

 

Bottom line strategy: The charts and indicators of CNC are pointed lower. Continue to avoid the long side of CNC.

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