The "Lightning Round" segment of Mad Money is a viewer favorite when callers get a chance to ask Jim Cramer about stocks they are interested in. One caller Wednesday night asked about Futu Holdings (FUTU) : "This is a good speculative stock in China," responded Cramer.
Let's check out the charts and indicators.
In this daily Japanese candlestick chart of FUTU, below, we can see that prices "went vertical" in the past five weeks but the rise over the past 12 months has also been incredible. FUTU is trading well above the rising 50-day moving average line and around four times the level of the rising 200-day moving average line.
By all measures and many years of watching prices I can declare FUTU as extremely extended or overbought if you like that term better.
Meanwhile, the On-Balance-Volume (OBV) line is still very bullish and so is the Moving Average Convergence Divergence (MACD) oscillator.
In this weekly Japanese candlestick chart of FUTU, below, we see some additional clues. Prices made a base around $10 so the rally is a thirteen-bagger. Amazing in such a short time frame.
Notice the upper shadows above $120 in the two most recent candles? Some traders have begun to reject the highs.
The OBV line made a small hiccup in January and the 12-week price momentum study has not yet slowed.
In this daily Point and Figure chart of FUTU, below, we can see that prices have left a $104 price target in the dust.
Bottom line strategy: I have no knowledge of the fundamentals driving this stock but the price action is very overbought so the risk to new buyers is high. Avoid purchases for now. A sharp correction may be worth buying. We'll see.
