Jim Cramer told viewers of "Mad Money" Friday night that in a volatile market, they should focus on long-term secular themes, like the arrival of 5G wireless technology. Not only is 5G up to 100 times faster than current technology, it's also optimized for the next generation of Internet devices and applications. Cramer unveiled a new 5G index with 10 stocks he said are riding the 5G wave.
First up was T-Mobile (TMUS) , the carrier with the largest 5G network.
Let's check out the charts and technical indicators of TMUS.
In this daily bar chart of TMUS, below, we can see that the price of TMUS has doubled from its March nadir, but something has been shifting with the technical indicators since early December that could generate a temporary correction to the downside.
Prices are still in an uptrend, but trading below the rising 50-day moving average line. The On-Balance-Volume (OBV) line could be warning of price weakness ahead. The OBV line was steady in October when prices corrected, but the OBV line has been showing some weakness recently and prices have weakened, too. Prices and the OBV line are now both pointed down. The Moving Average Convergence Divergence (MACD) oscillator has been weakening for several weeks and is now close to crossing below the zero-line for an outright-sell signal.
In this weekly Japanese candlestick chart of TMUS, below, we can see bearish "hanging man" patterns at the end of December and the first week of January. The latest candle is red and bearish and confirms the top reversals. TMUS is trading above the rising 40-week moving average line. The weekly OBV line peaked back in June and the line has not confirmed the price gains. The MACD oscillator has very close to a downside crossover and a take-profit, sell signal.
In this daily Point and Figure chart of TMUS, below, we can see a potential downside price target in the $114 area.
In this weekly close only Point and Figure chart of TMUS, below, we can see a potential price target in the $182 area.
Bottom line strategy: Traders should stay cautious of the long side of TMUS as some indicators are suggesting weakness. The daily Point and Figure chart suggests the $114 area as a possible price target and this is probably a better location to probe the long side of TMUS around the middle of the first quarter.
