The coronavirus pandemic has created a lot of so-called "new normal" in our economy, Jim Cramer told viewers of his Mad Money program Tuesday night. Cramer said that not all of them are sustainable while others will have staying power.
"You can't paint with too big of a brush," Cramer cautioned. Some stocks, like DocuSign (DOCU) , are a vast improvement over signing documents in person or waiting for them in the mail. That's why the rally in DocuSign is sustainable.
Let's check out the charts of DOCU.
In this daily bar chart of DOCU, below, we can see a huge rally from the March low to a high in early September. Prices retreated to a mid-September low and have been trading sideways to higher into December. DOCU is now testing the flat 50-day moving average line but still well above the rising 200-day moving average line which intersects down around $185.
The On-Balance-Volume (OBV) line peaked with prices in early September and moved lower. The line has been creeping higher but it remains below its September peak.
The Moving Average Convergence Divergence (MACD) oscillator is weakening and pointed down towards the zero line.
In this weekly bar chart of DOCU, below, we see a mixed to bullish picture. Prices are in an uptrend above the rising 40-week moving average line.
The weekly OBV line is in a bullish uptrend while the MACD oscillator is still correcting lower.
In this Point and Figure chart of DOCU, below, we used daily price data and the software is currently projecting a potential downside price target in the $184 area.
In this second Point and Figure chart of DOCU, below, we used weekly price data and here the X's and O's project to a $334 target.
Bottom line strategy: DOCU could retest its November low if it is dragged down by declines in the broad market. Investors could consider this correction, if it develops, as a buying opportunity for longer-term gains.