For his second "Executive Decision" segment of Friday's Mad Money program, Jim Cramer spoke with Dr. Udit Batra, president and CEO of Waters Corp (WAT) , the analytical instruments and software company for the healthcare industry.
Batra explained that 80% of all the molecules submitted for approval to the FDA last year used Waters' Empower software systems, which allows samples to be tested and have the data automatically submitted in a seamless process.
Batra added that Waters is not a Covid stock. While they were involved in vaccine and therapeutic development, the vast majority of their earnings are not Covid-related.
Let's check out the charts and indicators to round out the analysis.
In this daily bar chart of WAT, below, we can see that prices weakened from early September. WAT is trading below the declining 50-day moving average line and below the cresting 200-day line. The trading volume has increased from October telling me that traders are voting with their feet and selling more stock on the decline.
The On-Balance-Volume (OBV) line shows a decline from September and that too tells us that sellers of WAT have been more aggressive with heavier trading volume on days when the stock has closed lower.
The trend-following Moving Average Convergence Divergence (MACD) oscillator is below the zero line in sell territory but has crossed to the upside for a cover shorts buy signal in this time frame.
In this weekly Japanese candlestick chart of WAT, below, we see a bearish set-up. Prices have broken below the cresting 40-week moving average line. The weekly OBV line has been chopping lower the past five months and the MACD oscillator is bearish.
In this daily Point and Figure chart of WAT, below, we can see a downside price target in the $289 area.
In this weekly Point and Figure chart of WAT, below, the software is reading the X's and O's as bearish with a target of $241.
Bottom line strategy: WAT may have a great fundamental story but the charts are discounting some disappointing news ahead. Avoid the long side of WAT as shares look vulnerable to further declines.