During Thursday night's "Lightning Round" segment of Mad Money, one caller asked Jim Cramer about Takeda Pharmaceutical (TAK) : "I think they're smart people and I'm in favor of buying that stock," he said.
Let's check out this stock.
In this daily bar chart of TAK, below, we can see that prices made a "V" bottom in March. Prices have drifted lower the past seven weeks or so on light volume. A decline in light volume is many times viewed as positive but let's look closer.
TAK is trading below the declining 50-day moving average line and below the flat or topping 200-day moving average line. A rally back above $18.50 would change that picture.
The On-Balance-Volume (OBV) line made a low in March and rose but it has weakened since the middle of June and tells us that sellers of TAK have been more aggressive in recent weeks.
The trend-following Moving Average Convergence Divergence (MACD) oscillator is below the zero line but looks like it is moving to an upside crossover and cover shorts buy signal. Because TAK is not far below the zero line we could see an outright buy signal in the weeks ahead.
In this weekly bar chart of TAK, below, we can see that prices have been in a downtrend from late 2017/early 2018. If we just focus on the price action since early 2019 we could say that prices have been in a sideways trading range. A rally above the $20-$22 area would turn this chart bullish and mark an upside breakout. TAK is below the flat to rising 40-week moving average line.
The weekly OBV line has been making a base since March of 2019 and is constructive considering that prices have made lower highs in the past few months.
The MACD oscillator is right on the zero line so the next move higher in TAK could give us a buy signal on this time frame.
In this Point and Figure chart of TAK, below, we can see two clues. First, a trade at $21 should be an upside breakout and second, the chart is projecting a potential price target in the $35 area.
Bottom line strategy: TAK is a new name for me, but a trade at $21 looks bullish so traders could go long TAK above $21 risking a close below $17. Don't jump the gun. The $35 area is our price target for now.