In his second "Executive Decision" segment of his Mad Money program Wednesday night, Jim Cramer spoke with Melissa Smith, chairman and CEO of WEX Inc. (WEX) , the payment systems operator that is also working hard to make sure Americans better understand their health savings accounts.
Smith explained that HSAs are a great way to save and defer taxes on medical-related payments. Many employers offer HSA plans, but few employees take advantage of them or even know how they work. WEX is helping to promote HSAday.com, a website dedicated to helping people make better decisions surrounding HSA plans.
Turning to the topic of their business, Smith said business volumes at WEX remain strong and their new deals with Chevron (CVX) and Shell (RDS.A) are proof of that. Shares of WEX are up 48% for the year. Let's check out the charts and indicators of WEX this morning.
In this daily bar chart of WEX, below, we can see that prices have traced out a sideways to higher consolidation pattern the past six or seven months. Prices are above the rising 200-day moving average line after successful tests of the line in August and earlier this month. Prices also recently gapped above the 50-day moving average line and its slope is now positive.
The daily On-Balance-Volume (OBV) line shows a bullish rise from late December but the indicator has leveled off in recent months. Buyers and sellers of WEX look to be in balance but it won't take much volume and price strength for the OBV line to make a new high for the move up. A new high from the OBV line would be a strong bullish statement for WEX.
The Moving Average Convergence Divergence (MACD) just crossed to the upside from below the zero line for a cover shorts buy signal. The oscillator does not have to move up much to cross the zero line for an outright buy signal.
In this weekly bar chart of WEX, below, we can see a mostly positive picture. Prices have been making a "high level" consolidation pattern mostly above the highs of 2018. This pattern is probably a base for still further gains in the months ahead. Prices are above the rising 40-week moving average line so the math tells us we are in an uptrend.
The weekly OBV line is very steady and close to making a new high for the move up to confirm the price gains.
The weekly MACD oscillator is in a take profits sell mode above the zero line but the two averages that make up this indicator have begun to narrow. We could see a fresh buy signal in a few weeks.
In this Point and Figure chart of WEX, below, we can see a bullish accumulation pattern with a possible or potential upside price target of $243. A trade at $222.48 will be a breakout on this chart and should precipitate further gains.
Bottom line strategy: The charts and indicators of WEX look positive. Trade WEX from the long side. Start a long position at current levels and consider adding above $222. The $242 area is our first price target. Risk a close below $199 for now.