The fast-paced "Lightning Round" segment of Mad Money is a viewer favorite where Jim Cramer takes questions about stocks from callers. One caller Monday evening asked about Digi International (DGII) : "This stock intrigues me. In a few days, I'd be a buyer."
Let's check out the charts of this provider of internet connectivity products and services.
In this daily bar chart of DGII, below, we can see that prices topped out back in November and December, and then plunged lower until the broad market bottomed in March. Prices have recovered into August and have closed above the bottoming 200-day moving average line and above the rising 50-day moving average line.
The On-Balance-Volume (OBV) line has moved up nicely from its March low telling us that buyers of DGII have been more aggressive.
After hugging the zero line for much of June and July the Moving Average Convergence Divergence (MACD) oscillator has turned upwards to an outright buy signal.
In this weekly bar chart of DGII, below, we went to late 2016 to show that prices have been stuck in a large sideways trading pattern. The $12 level looks to be the center of the activity. A very long-term chart (not shown) shows that prices have been trading sideways since 2004.
Prices have rallied above the declining 40-week moving average line and the weekly OBV line has moved up from its March low.
The MACD oscillator could soon cross the zero line for a buy signal on this longer time frame.
In this Point and Figure chart of DGII, below, we used weekly close only price data. This chart goes back to 2005 and shows a possible upside price target in the $21 area.
Bottom line strategy: Patient traders and investors could go long DGII at current levels risking a close below $11.50 for now. The $21 area is our first price target.
