For his "Executive Decision" segment of Mad Money Tuesday night, Jim Cramer sat down with Joe Kiani, CEO of Masimo Corp. (MASI) , a maker of patient monitoring equipment. The share price of MASI is up 30% for the year and 286% over the past five years. Kiani said that opioids remain a leading cause of death in our country and Masimo's new patient monitoring equipment aims to eliminate the "dead in bed" phenomenon where patients fall asleep and never wake up. What is not new is technical analysis which dates back to the 1880's in the U.S. and the 1740's in Japan. Let's check out the charts.
In this daily bar chart of MASI, below, we can see an interesting set up with the charts and indicators. MASI has recently been trading between the rising 200-day moving average line and the declining 50-day average line. MASI successfully tested the 200-day line a number of times but only now is MASI testing the 50-day line. Based on this observation, the path of least resistance for MASI is up. The daily On-Balance-Volume (OBV) line shows a positive trend for the year but a dip in October and steady movement in November and December. The trend-following Moving Average Convergence Divergence (MACD) oscillator turned up for a cover shorts buy signal in late November and is approaching the underside of the zero line.
In this three-year weekly bar chart of MASI, below, we can see that prices are up three-fold over the past three years. MASI is trading above the rising 40-week moving average line. The weekly OBV line shows a long-term uptrend but has been flat/neutral the past two months. The weekly MACD oscillator crossed to a take profits sell signal in October but the two moving averages that make up this indicator have begun to narrow. A new buy signal could develop in the near future.
In this Point and Figure chart of MASI, below, we can see an upside price target of $133.20. A trade at $113.10 should be a double top breakout.
Bottom line strategy: MASI held above support in the $100 area and has successfully tested the rising 200-day line. Traders could go long MASI at current levels and on strength above $113. Risk a close below $104 and target the $125-$133 area on the upside.
