DexCom Looks Vulnerable Despite Forecasts of Increased Usage
The charts of the medical device maker are weakening. Here's what traders need to know.
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DexCom Inc. DXCM is a medical device maker mostly known for its diabetes monitors. The total addressable market for diabetes is big and growing so we should be positive on the stock price, right? Maybe not.
Let's check out the charts and indicators.
In this updated daily bar chart of DXCM, below, I can see that the shares have been trading right on the flat 200-day moving average line. DXCM is also trading below the declining 50-day moving average line.
The trading volume has been declining since November. Often we see an increase in trading volume when a stock tests the 200-day moving average line as traders "bet" that the test of the line will be successful. For DXCM it doesn't show an increase in volume.
The On-Balance-Volume (OBV) line shows a slight rise from the middle of April suggesting a shift towards more aggressive buying. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line in bearish territory.
In the weekly Japanese candlestick chart of DXCM, below, I see a mixed to bearish setup. Prices have rolled over the past seven months or so and are now testing the rising 40-week moving average line.
Trading volume has been shrinking since October. The weekly OBV line has been declining since January. The MACD oscillator is correcting and pointed down towards the zero line.
In this daily Point and Figure chart of DXCM, below, I can see a potential downside price target in the $99 area.
In this weekly Point and Figure chart of DXCM, below, I can see a potential downside price target in the $106 area.
Bottom-line strategy: I see countless commercials on TV for DexCom's products and diabetes management is a big market but at this point in time the charts of DXCM look vulnerable.
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