Robinhood Markets (HOOD) is up a big percentage in trading Monday on news that money manager Cathie Wood had purchased more shares in the online brokerage app. Let's check out the charts.
In our last review of HOOD back on October 28 I wrote that "I lived through the 1973-74 stock market decline and dozens of brokerage firms went out of business or merged with bigger shops as the DJIA was cut in half. I prefer to do whatever securities business I do with a company that has been around for decades. Just saying. In the meantime, I find the charts of HOOD bearish and pointed lower. Avoid the long side."
In this updated daily bar chart of HOOD, below, we can see that prices traded much lower from our last review. Prices are in a downtrend below the declining 20-day and 50-day moving average lines. The daily On-Balance-Volume (OBV) line declined from August till Friday and has just turned higher. The 12-day price momentum study has been making higher lows since early December telling us that the pace of the decline has been slowing.
In this daily Japanese candlestick chart of HOOD, below, we can see that Thursday and Friday was a bullish engulfing pattern with heavy volume and today is bullish confirmation. The OBV line has started to improve and the slow stochastic indicator is improving after an oversold extreme.
In this daily Point and Figure chart of HOOD, below, we can see that the software is projecting a potential $22 price target.
Bottom line strategy: Purchases and sales by Cathie Wood attract a lot of attention. Prices could rebound to the $22 area and probably higher. Aggressive traders could long HOOD risking to $9. This rally may only last a month so don't get too attached.
