One caller during the "Lightning Round" segment of Mad Money Tuesday night asked Jim Cramer about CBAK Energy Technology (CBAT) : "The stock has had a monster move. I can't recommend them here," Cramer told the caller.
The company manufactures and distributes a variety of standard and customized lithium ion rechargeable batteries. This may be the hot energy trade of the hour but let's check the charts to see if time has run out.
In this daily Japanese candlestick chart of CBAT, below, we can see that prices have surged eleven-fold in a very short period of time. You could have bought a boat load of shares around $1 and ride it for two waves higher. It is hard to spot a key bearish candle in November but the middle of the large white candle can act as resistance - roughly $9.50 or so.
There was some quiet accumulation in July and August if you look closely at the On-Balance-Volume (OBV) line but you can easily see the surge in late September and again in the middle of November. Trading volume was actually much lighter on the second advance than the first leg higher. Perhaps early buyers sold into the second rally to around $11.
The Moving Average Convergence Divergence (MACD) oscillator has narrowed recently towards a potential take profits sell signal.
In this weekly Point and Figure chart of CBAT, below, we can see both a long term price target of $28 but also that prices can decline as fast as they go up.
Bottom line strategy: Money today is more concentrated and it moves faster than ever. Getting out of a stock has become more important than getting into it, and you need to think differently about stocks that trade at $1 one day and $11 just a few weeks later. Weakness below $5.50 could precipitate even further declines.
