During Monday's Mad Money program Lightning Round segment host Jim Cramer fielded questions from callers. One caller asked about FuelCell Energy (FCEL) : "No, that one is too speculative," responded Cramer.
Let's check out the charts.
In this daily bar chart of FCEL, below, we can see that prices made a rapid three-month run up from November to February. Prices have been retreating since a mid-February peak in the $28-$30 area. Prices have quickly corrected a significant percentage of the gains and closed below the 50-day moving average line. FCEL bounced in early March to the underside of the cresting 50-day line and turned lower again — a "classic" rally failure.
Trading volume peaked in November and was significantly lower in February when prices topped. The On-Balance-Volume (OBV) line also peaked in February and shows a slight drift lower. I would assume that many of the early FCEL buyers have decided to hold their positions despite the decline. The Moving Average Convergence Divergence (MACD) oscillator has been bearish since moving below the zero line in early March.
In this weekly bar chart of FCEL, below, we can see that prices made a base around $2 in 2019 and 2020 before the huge rally this year. Prices are still above the 40-week moving average line but it looks like the average line is beginning to fade. The weekly OBV line has been working lower since the middle of February and tells us that traders have turned into aggressive sellers. The MACD oscillator is pointed downward after crossing to a take-profit sell signal.
In this 10-year weekly bar chart of FCEL, below, we can see that prices had been in a multi-year decline and the price recovery has brought FCEL back to major overhead resistance. We are using a logscale for plotting.
In this daily Point and Figure chart of FCEL, below, we can see that prices met a downside price target in the $12 area.
In this weekly Point and Figure chart of FCEL, below, we used close-only price data and a traditional even-dollar scaling. Here the software shows the $5.50 area as a potential downside price objective.
Bottom line strategy: It looks like the speculative runup in FCEL is over and prices are headed back down to the $5.50 area and potentially lower. This is not a name I want you to see you be involved in from the long side.
