For his first Executive Decision segment of "Mad Money" Thursday, Jim Cramer welcomed David Cordani, president and CEO of Cigna Corp. (CI) , back to the show to talk about the big insurer's business and outlook. Shares of Cigna rose 2.6% Thursday on the company's strong quarterly results, but still trade for just 10x earnings.
Cordani said Cigna is privileged to have more than 170 million customer relationships and its mission is to help all of them with their health, well-being and peace of mind. Cigna finished the year strong, Cordani said, and is forecasting 10% revenue growth in 2020 with 13% to 16% growth in its Medicare business.
Let's check and see if the charts for Cigna are healthy.
In this daily bar chart of CI, below, we can see that prices have surged higher recently but the pattern over the past three months might be considered a broadening pattern, or as some call it an expanding triangle. The up-and-down swings get bigger until CI decides to break out to the upside or the downside. For now the slope of the 50-day moving average line is cresting and the 200-day moving average line has a positive slope. Trading volume looks like it has remained steady the past three months, but typically it tends to expand with a broadening pattern. The daily On-Balance-Volume (OBV) line is stronger from early October but not particularly strong in recent weeks. A stronger OBV line might suggest an upside breakout to me. The Moving Average Convergence Divergence (MACD) oscillator is down around the zero line, telling us the price action lacks trend strength.
In this weekly bar chart of CI, below, we used four years of price history to get a good perspective on CI. Prices have been trading in a wide sideways pattern since 2017. The $220 area has become significant resistance. CI is above the rising 40-week moving average line. The weekly OBV line has moved up and down with price action the past four years, but the line has diverged from the price action the past three months. The long-term MACD oscillator has narrowed toward a possible take-profits sell signal.
In this daily Point and Figure chart of CI, below, we can see that prices have broken out to a new high at $215.94 and a potential price target of $265 is projected.
Bottom line strategy: Sometimes the charts and indicators are clearly bullish or clearly bearish. CI is somewhere in between at the moment. The Point and Figure chart suggests that CI can break the overhead resistance around $220 and climb to $265. However, the indicators that are derivatives of the price action do not support that conclusion at this point in time.