C3.ai Inc. (AI) is a platform to develop, provision, and operate artificial intelligence applications. From what I have been reading, AI applications can streamline operations, increase security, improve data sorting, and even convert customer support divisions into revenue generators.
Sounds terrific, but does that make the stock a good trade or investment? Let's check the charts.
In this daily bar chart of AI, below, I can see that prices were in a downtrend and did not hit a low until December. Prices then soared three-fold in a little more than a month -- truly amazing.
Trading volume soared on the advance and contracted on the subsequent correction and that is what I like to see. AI corrected a third of the advance and have gapped higher Friday. I don't know where prices will close today, but it looks like AI is resuming the advance.
The slope of 50-day and the 200-day moving average lines have both turned positive and a bullish golden cross of these two lagging indicators can be seen. The On-Balance-Volume (OBV) line is strong while the Moving Average Convergence Divergence (MACD) oscillator is poised for a new outright-buy signal.
In this weekly Japanese candlestick chart of AI, below, I see a developing bull story. Prices have made a low and rallied above the 40-week moving average line. I would have preferred to see a proper base form but you have to deal with the charts as they unfold. Trading volume climbed but the weekly OBV line shows a mixed result - up and then down. The MACD oscillator is moved above the zero-line.
In this daily Point and Figure chart of AI, below, using even dollar scaling the chart shows a downside price target in the $14 area. A trade at $27 may be needed to turn this chart bullish.
In this second daily Point and Figure chart of AI, below, I used percentage change scaling. Here the chart suggests a price target in the $39 area.
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In this third Point and Figure chart of AI, below, I used weekly price data. Here the software projects the $69 area as a possible price objective.
Bottom line strategy: I would prefer to see a price chart with a well established base pattern, but the charts of AI have turned to the upside. Hopefully AI is not a "flash in the pan" and the rally has staying power. Aggressive traders could go long AI at current levels risking to $19.50.
