For his second "Executive Decision" segment of Mad Money last Thursday evening, Jim Cramer spoke with Josh Silverman, CEO of Etsy Inc. (ETSY) , the online marketplace that just posted a 137% surge in revenues and topped analysts' earnings expectations.
Silverman said there's a huge opportunity for Etsy in our post-Covid-19 world. He said Etsy has something for everyone and consumers can buy directly from the artisans making their items.
Etsy's strong results included huge surges in multiple categories, Silverman said, including home furnishings, jewelry and apparel, all categories that lost ground at traditional retailers. Etsy is also the place to go for masks, he said, with thousands of vendors offering personalized options that won't take supplies away from doctors and hospitals.
We last looked at ETSY on June 29 and wrote that, "With prices looking extended on the upside and a bearish divergence from the momentum indicator, traders who are long ETSY should both take more than of their profits (i.e., sell) at current levels and look to sell the balance of their longs in the $110-$118 area if available."
Traders got the opportunity to book profits in early July and were sold-out for the most recent advance to new highs. Let's check the latest charts.
In this daily bar chart of ETSY, below, we can see that prices are up nearly five-fold from their March nadir of $30. Prices are above the rising 50-day moving average line and the rising 200-day line.
The On-Balance-Volume (OBV) line has made a new high along with prices. The Moving Average Convergence Divergence (MACD) oscillator has been bullish since early April.
In this weekly bar chart of ETSY, below, we see a bullish picture with prices above the rising 40-week moving average line. Actually prices are extended above the 40-week line.
The weekly OBV line is bullish and so is the MACD oscillator.
In this Point and Figure chart of ETSY, below, we can see a projected price target in the $210 area.
Bottom line strategy: We have an interesting crossroads here. ETSY is still in an uptrend but we have sold out our recommendation. With a possible $210 price target now from the Point and Figure chart (above) we have to consider the risk and the reward. If we go long ETSY around $140 we would have to risk a close below $120 to make perhaps $60-$70. The math makes sense but I would only purchase a small position.