The Mad Money "Lightning Round" Wednesday evening did not disappoint viewers as Jim Cramer fielded questions from viewers. One caller asked about Shopify (SHOP) : "This is a chance to buy this company well off its high. You want to own it," replied Cramer.
We last looked at the charts of SHOP back on March 18 where we wrote that "It was a great or lucky move to take profits around $1,500. Prices have declined and the 200-day moving average line has held but that might be a temporary situation with the yield on Treasury bonds rising. I would take a wait and see attitude with SHOP for now."
Prices have improved recently so a fresh look at the charts is needed.
In this daily bar chart of SHOP, below, we can see that prices have made a recent new high and have pushed above much of the highs of March. This would qualify for a four-week upside breakout (an old mechanical buy signal). Prices have touched the underside of the declining 50-day moving average line but have yet to close above it.
The daily On-Balance-Volume (OBV) line shows improvement the past few weeks and more interesting is the bullish divergence from the 12-day price momentum study. Prices made lower lows in March but the momentum study made higher lows telling us that the pace of the decline slowed. This difference between price and indicator is a leading indicator of directional change.
In this weekly candlestick chart of SHOP, below, we can see that prices have so far survived a test of the rising 40-week moving average line. The weekly OBV line has yet to turn up and the MACD oscillator has just started to narrow.
In this daily Point and Figure chart of SHOP, below, we can see that prices just made an upside breakout to a new high. A potential price target of $1,486 is now being projected.
In this weekly Point and Figure chart of SHOP, below, a target of $1,613 is being projected.
Bottom line strategy: Aggressive traders could go long SHOP at current levels only if they can afford to risk to $1,050 for now.