• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Shares of eHealth Look Vulnerable to More Sharp Declines

The charts of the online insurance marketplace suggest sellers of its stock have dominated the price action for a while now.
By BRUCE KAMICH
Aug 19, 2020 | 08:42 AM EDT
Stocks quotes in this article: EHTH

For his final Executive Decision segment of "Mad Money" Tuesday, Jim Cramer checked back in with Scott Flanders, CEO of eHealth Inc. (EHTH) , an online insurance marketplace that has seen its shares fall 29% in the past month after the company's results came under scrutiny.

When pressed about eHealth's 42% churn rate, Flanders said it is critical to retain customers but that retention got out of control while the company was focused on growth. However, after auditing the situation, eHealth determined that 90% of the churn was of the company's own doing and that it has made significant changes to address the retention issue.

Flanders said eHealth has hired more internal agents to assist customers, has incentivized agents to focus on retention and has a dedicated retention team that is continually improving its model to keep customers happy.

Cramer said it was important for Flanders to admit the problems and outline plans to fix them.

We have not looked at the charts of EHTH since last Dec. 3 and wrote at that time, "EHTH has made a rapid climb in recent weeks so some period of consolidation or sideways price action is probably due. Traders could use this anticipated sideways activity to go long, risking a close below $75 for now." We noted a potential $171 price target from our weekly Point and Figure chart but prices failed several times around $152.

Let's check out the latest charts.

In this updated daily bar chart of EHTH, below, we can see that prices have struggled since February. Prices made a large triangle-like pattern and finally gapped sharply lower in July. EHTH is trading below the declining 50-day moving average line and below the cresting 200-day moving average line. The On-Balance-Volume (OBV) line has lost a lot of ground since early April and tells me that sellers of EHTH have been more aggressive for months. The Moving Average Convergence Divergence (MACD) oscillator shows very uneven movement lower since December and suggests that sellers have dominated the price action for a long time now.

In this weekly bar chart of EHTH, below, we see a dramatic rise from late 2017 and an equally impressive top formation in 2020. Prices are trading below the cresting 40-week moving average line. The weekly OBV line has been weak since February and tells me that investors have been more aggressive sellers. The MACD oscillator crossed the zero line last month for a longer-term sell signal.

In this weekly Point and Figure chart of EHTH, below, we can see a major distribution pattern (selling) and a downside price target of $13 -- not pretty.

Bottom line strategy: The charts and indicators of EHTH are very bearish. Prices might have a big decline ahead of them and traders and investors should avoid the long side of EHTH.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are prohibited from trading individual securities.

TAGS: Investing | Stocks | Technical Analysis | Consumer | Healthcare | E-Commerce | Mad Money | Executive Interview | Real Money

More from Stocks

The Psilocybin Patent Race Is On

Debra Borchardt
Mar 6, 2021 12:30 PM EST

It feels like these companies are casting a wide net, but it makes sense to file at the beginning of this mushroom mania.

The Challenge of Short Selling

James "Rev Shark" DePorre
Mar 6, 2021 10:00 AM EST

Short selling is a powerful tool, but it is not just the inverse of going long and requires a very different mindset to do it effectively.

Kass: There Are Many Reasons to Be a Bear

Doug Kass
Mar 6, 2021 8:15 AM EST

I believe the markets are headed lower - probably not in a straight line or as steep as the last few days, but in a saw tooth fashion lower.

Bounce Takes Some of the Sting Out of a Painful Week

James "Rev Shark" DePorre
Mar 5, 2021 4:51 PM EST

It is premature to declare that the worst is over, but the intensity of the selling will go a long way toward helping a bottom to form.

The Selloff in Twilio Could Extend Deeper Into March

Bruce Kamich
Mar 5, 2021 2:30 PM EST

TWLO could bounce in the short-run but avoid the long side for now.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:38 AM EST GARY BERMAN

    The INDU and DIA

    FIBOCALL: The INDU index and the DIA The INDU ...
  • 10:44 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    "The Challenge of Short-Selling"
  • 08:40 AM EST PAUL PRICE

    Recent Pick SpartanNash (SPTN) Raised Its Quarterly Payout by 3.9%

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login