Driving north on 95 through Connecticut you can see the corporate offices of the World Wrestling Entertainment (WWE) . You can't miss it cause the traffic can crawl on that section of 95. Hundreds of parents will find that out in about two weeks or less when they drive their children to Boston to start their freshman college experience.
Jim Cramer turned bullish on the company in March 2017 and the stock has soared. WWE is up over 256% since then. I remember when wrestling was a dodgy late night program without the glitter and fireworks. Nostalgia. Jim is still bullish on WWE but the charts look very extended to me.
(For more on WWE see, More Than One Way to Win: Cramer's 'Mad Money' Recap)
In this daily bar chart of WWE, below, we can see that prices were trading around $20 last August and touched $85 last month. Incredible. Prices are above the rising 50-day moving average line and tests of the line in April and May were great buying opportunities.
The rising 200-day moving average line is way below and intersects around $45.
The daily On-Balance-Volume (OBV) has been rising the past year and is still bullish.
The Moving Average Convergence Divergence (MACD) oscillator has turned down to a take profits mode.
In this weekly chart of WWE, below, you can really see the dramatic rise in the share price from around $15 back in late 2015 and early 2016. Prices are above - maybe too far above - the rising 40-week moving average line.
The weekly OBV line has been strong for months but shows a dip from June.
The weekly MACD oscillator has been narrowing for a number of weeks and could soon cross to the downside.
In this Point and Figure chart of WWE, below, we can see the huge move that has taken place. On the left side of this chart is the volume at price data and there has been a bulge in trading volume near the recent highs.
This in itself is not bearish but if prices slip lower it puts the recent buyers of WWE underwater and they could become sellers.
Bottom line strategy: WWE is extended on the upside and that makes the stock vulnerable to profit taking and other selling. A close below $75 could precipitate further selling.