One caller during the Tuesday night Lightning Round of " Mad Money" asked about Enphase Energy ( ENPH) .
"This is a red-hot stock, but discipline says you need to take profits," said Jim Cramer.
The company designs and manufactures software-driven home energy products that include solar generation, home energy storage and web-based monitoring and control. Sounds interesting, but let's check the charts to see if this stock has gone parabolic.
In this daily bar chart of ENPH, below, we can see that prices have gone from around $4-$5 last fall to around $35 now. The kind of stock everyone would love to own.
Prices look like they are extended above the rising 50-day moving average line and definitely extended above the rising 200-day line. The On-Balance-Volume (OBV) line shows a rise this year, until this month when it turned sideways while prices continued to rise. A rising price pattern without increased volume is a weakening picture. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside for a take profits sell signal.
In this weekly bar chart of ENPH, below, we can see a much more dramatic price rise. Did I say dramatic? Prices are extended above the rising 40-week moving average line. The OBV line and the MACD oscillator are bullish.
In this Point and Figure chart of ENPH, below, we see another picture of this dramatic price advance. The chart is projecting a modest decline, but if you look at the volume by price scale on the left side of the chart there is very little potential support below the market. Once a decline starts it could fall much further than expected.
Bottom line strategy: Jim Cramer and I are on the same page on ENPH - take profits.
