For an "Executive Decision" segment of Mad Money Wednesday night Jim Cramer spoke with Peter Gassner the founder and CEO of Veeva Systems (VEEV) . Veeva is the cloud software provider to the pharmaceutical and life sciences industry, Cramer said. Life sciences seems to be an exciting business as does Veeva's new Quality One product, but I like to check the charts and indicators.
In the daily bar chart of VEEV, below, we can see that the stock has doubled from February to September. Reminds me of my Chrysler Crossfire -- fast. This month VEEV has declined and closed below the rising 50-day moving average line.
Prices have bounced in recent days and sits below the average line. We could see prices rally back above the line but a rally failure at the underside of the average looks more likely Thursday morning. The slower-to-react 200-day moving average line intersects below $80 and has not been tested in the past year.
The daily On-Balance-Volume (OBV) line shows strength to late September, telling us that buyers of VEEV were more aggressive. This month the OBV line is lower and suggests a shift to more aggressive selling. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line now in a sell mode.
In the weekly bar chart of VEEV, below, we can see mixed signals at this juncture. Prices are above the rising 40-week moving average line but this is a lagging indicator.
The weekly OBV line has been mostly neutral the past two years and shows a slight decline since early September. The weekly MACD oscillator has crossed to the downside for a take profits sell signal.
In this Point and Figure of VEEV, below, we can see a small upside price projection. This would mean that prices do not rally to a new high to refresh the uptrend. A decline to $87.32 would be a bearish signal.
Bottom-line strategy: This is a typical problem for technical analysts -- a disconnect from the fundamentals that sound strong and a price chart that is showing weakness. Do you buy the dip or sell the rally? The 1973-74 bear market is part of my DNA so I feel more comfortable now with selling rallies.