In his Executive Decision segment of Monday's "Mad Money" program, host Jim Cramer spoke with Kevin Sayer, chairman, president and CEO of Dexcom Inc. (DXCM) , a maker of glucose monitoring systems that presented at the annual JP Morgan Healthcare Conference.
Sayer said that sadly, old-fashioned finger pricks are still the standard of care for most diabetes patients. That's why Dexcom is doing everything it can to increase awareness about its products and the many health benefits they can provide. He said in a recent study of Type 2 diabetes, patients who used Dexcom for 24 weeks saw a massive reduction of their glucose levels that averaged 54 points.
Dexcom's new seventh-generation monitoring system is only a little bigger than a nickel, Sayer said, and is a full 16% smaller than the generation that preceded it.
Let's monitor the charts and technical indicators of Dexcom. In our last review back on Nov. 4 we wrote, "Traders long DXCM should raise stops to $570. Some profit taking should be considered in the $672-$700 area." Let's see how that turned out.
In this daily bar chart of DXCM, below, we can see that prices topped out at $659 in late November, which was shy of the bottom end of our target zone. Let's hope traders did take some profits there or were wise enough to be stopped out at $570 as prices skidded lower in late November and early December. DXCM is trading below the declining 50-day moving average line and it has closed sharply below the 200-day moving average line.
The On-Balance-Volume (OBV) line peaked in mid-to-late November and turned lower, telling us that sellers of DXCM have been more aggressive with heavier trading volume occurring on days when DXCM has closed lower. The trend-following Moving Average Convergence Divergence (MACD) oscillator is in a sell mode way below the zero line.
In this weekly Japanese candlestick chart of DXCM, below, we can see that a spinning top marked the high in November. A recent long red candle (bearish) shows us that selling has been aggressive and prices have broken below the rising 40-week moving average line. The OBV line turned lower in early November. The MACD oscillator is pointed down but still above the zero line.
In this daily Point and Figure of DXCM, below, we can see the steep decline. Prices have reached and exceeded the downside price target of $474.
In this weekly Point and Figure chart of DXCM, we can see the software is projecting a downside price target in the $363 area.
Bottom line strategy: Prices closed on the highs of the day Monday so some further near-term price recovery should be expected. This may or may not become a durable low. A low is not a bottom in my book, so further testing should be expected. Avoid the long side for now.
