The fast-paced "Lightning Round" segment of Mad Money is a viewer favorite. Callers get the chance to ask Jim Cramer about securities that they are interested in. One caller Tuesday night asked about Quanta Services (PWR) : "I've been urging people to take some profits," he said.
Let's check out the charts and indicators of PWR.
In this daily bar chart of PWR, below, we can see some bearish divergences that are worth pointing out. Prices have been in an uptrend since the late March low and now stand as a three-fold high. Prices are above the rising 50-day moving average line and above the rising 200-day line.
The daily On-Balance-Volume (OBV) line has been flat the past seven weeks even as prices have made new highs for the move up. This is a bearish divergence when prices rise but the indicator does not confirm with a parallel movement.
The 12-day price momentum study shows lower highs from October to January telling us that the pace of the rally has been slowing down and that can be a warning sign of a reversal.
In this weekly bar chart of PWR, below, we can see an impressive base around the $35 area. Prices broke out on the upside around June of last year and we see that prices have doubled.
The weekly OBV line is bullish and confirms the price gains but the 12-week momentum study shows that the pace of the advance has been slowing.
In this Point and Figure chart of PWR, below, we used daily price data. Here we can see that the software is projecting the $94 area as a potential price target.
Bottom line strategy: Traders should consider being scale-up profit takers on PWR between current levels and our Point and Figure target of $94.
