Verastem Inc. (VSTM) was mentioned in the Lightning Round during Mad Money last night. Cramer said it a speculative stem cell stock. Okay. Buyer beware this is a risky investment. That being said, let's check out the charts and indicators.
In this daily bar chart of VSTM, below, we can see that prices have made an impressive rally from early April as prices moved from just $3 to briefly over $10. Wow! This month prices have declined quickly to break below the cresting 50-day moving average line. Prices are still above the rising 200-day line. The On-Balance-Volume (OBV) line moved up firmly from early April to late August telling us that buyers were aggressive. The line has declined this month and tells us that sellers are more aggressive now. The Moving Average Convergence Divergence (MACD) oscillator is crossing the zero line for a sell signal signal on this time frame.
In this weekly chart of VSTM, below, we went back to 2013 to get the bigger picture. After a big decline from $16 to around $1, prices rebased before starting a fresh uptrend. Prices are above the rising 40-week moving average line. The weekly OBV shows a bullish rise until this month when a decline can be seen. The MACD oscillator is crossing to a take profits sell signal.
In this Point and Figure chart of VSTM, below, we can see an upside price target of $20.25. Support should develop around $5.50 and below.
Bottom line strategy: VSTM could be a buy after a test of the 200-day line around $5.50.