The markets truly are strange, The Street's Jim Cramer told viewers Friday night during his "Mad Money" program on CNBC. That's the only explanation for how shares of Crocs (CROX) could have risen from their $6 lows last year to over $25 a share today.
Cramer said he's simply speechless, but Crocs are apparently back in style. Things began to turn for Crocs in 2015 after an activist investor spurred a turnaround at company. They began to streamline operations, close under performing locations and bolstered their online, direct-to-consumer business.
Slowly but surely, sales and margins began to improve and this year with the result that Crocs began beating expectations and raising their forecasts. Cramer reminded viewers that betting on teen fashion is always risky, which is why he'd only recommend Crocs for speculation and certainly not for retirement savings.
But if you're a fan of Crocs, he said, now might be the time to start buying.
In this daily bar chart of CROX, below, we can see that prices marched steadily higher from last November and gapped higher this month. Prices have nearly tripled in just 12 months - pretty impressive price performance for a footwear company. CROX is trading above the rising 50-day moving average line and the bullish 200-day average line.
The daily On-Balance-Volume (OBV) line shows a strong rise for the past year and tells me that buyers of CROX have been more aggressive.
The trend-following Moving Average Convergence Divergence (MACD) oscillator generated a fresh outright go long signal earlier this month.
In this weekly bar chart of CROX, below, we can see a bullish alignment of our favorite indicators. Prices are above the rising 40-week moving average line.
The weekly OBV line is bullish and rising and the MACD oscillator just turned upwards again.
In this Point and Figure chart of CROX, below, we can see that prices reached a $23 price target. A period of sideways consolidation is probably in order.
Bottom line strategy: CROX is not extended on the upside but a period of sideways price action is anticipated for the next few weeks.