In his first Executive Decision segment of Monday's "Mad Money" program, host Jim Cramer spoke with Dan Mondor, chairman and CEO of Inseego Corp. (INSG) , a provider of 5G network hardware.
When asked about Inseego's declining stock price, Mondor said there are a number of factors at play. He said while it's true a pandemic-inspired surge in sales largely has abated, current sales are still higher than they were pre-pandemic and Inseego is still on target to meet its goals.
Mondor added that while Inseego continues to focus on 5G wireless products over the long term, demand for 4G wireless remains strong and his company's cloud subscriptions have grown triple digits over the past year.
Cramer said just because a stock goes down doesn't make it bad. We looked at the charts of INSG on March 2 and wrote at that time, "I will assume that traders did not try to go long INSG today on the gap lower. Stand aside and let prices fall. This looks like a 'hot knife.'"
Let's check out the charts and indicators of INSG again.
In this updated daily bar chart of INSG, below, we can see that prices have remained depressed since early March. INSG is trading below the declining 50-day moving average line and below the flat to declining 200-day moving average line. Prices have so far held around $9 -- the same area as the November low (a.k.a. support) -- but the On-Balance-Volume (OBV) line is flat and the Moving Average Convergence Divergence (MACD) oscillator remains buried below the zero line, so it does not look like traders/investors have been buying up shares at a bargain.
In this weekly Japanese candlestick chart of INSG, below, we fail to find any strong sign that a low is developing. The middle of the large red candle (around $12) at the beginning of March is going to act as resistance. The weekly OBV line is pointed down, telling me that sellers of INSG have been and are more aggressive. The OBV line has broken its November low and could be foreshadowing that prices will also break their November lows. The MACD oscillator on this longer time frame is close to breaking below the zero line for an outright sell signal.
In this daily Point and Figure chart of INSG, below, we can see a potential downside price target in the $8.15 area. This would mean the November low is broken and the downtrend is refreshed.
In this weekly Point and Figure chart of INSG, below, we used a traditional even- dollar scaling. A potential downside price target of $0 -- zero -- is projected. INSG may not go to zip, but a trade at $8.00 on this chart will keep things bearish and open the way to further losses. Don't shoot the messenger.
Bottom line strategy: INSG may still have a good fundamental story, but from my simple perspective the charts remain unattractive. Continue to avoid the long side.