High-flying tech stocks are a lot like wide receivers in football, Jim Cramer told viewers of his Mad Money program Wednesday night. With the Super Bowl just around the corner Jim talked football and stocks - when everything goes right, things are explosive, but you definitely don't want to be there when they drop the ball.
One such example is Shopify (SHOP) , the best non-Amazon (AMZN) e-commerce play. Shopify helps small businesses set up shop online and the stock has been unstoppable, up over 20% so far in 2020. Shopify is a wider trader, however, selling off harder than the average stock on market-wise pullbacks.
Let's check out the charts of SHOP and hope we don't drop the ball. (Speaking of not dropping the ball I was disappointed that my classmate Drew Pearson did not get into the Football Hall of Fame.)
In this daily bar chart of SHOP, below, we can see that prices have risen dramatically the past year. There is a correction/pullback from late August into late September and then a retest of the September low in early November before the rally resumes. Prices are above the rising 50-day moving average line and the rising 200-day line which was successfully tested in November.
The trading volume has been heavier since September and the On-Balance-Volume (OBV) line is now back to test its August zenith.
The Moving Average Convergence Divergence (MACD) oscillator crossed above the zero line in late November for a buy signal that is still in force.
In this weekly bar chart of SHOP, below, we can see that prices are up more than four-fold in the past few years. A great story. SHOP is above the rising 40-week moving average line.
The weekly OBV line is at a new high for the move up and the MACD is bullish on this longer time frame.
In this Point and Figure chart of SHOP, below, we can see a breakout to a new high for the move up and a potential longer-term price target in the $564 area.
Bottom line strategy: Traders could wait for a pullback closer to $450 to go long SHOP risking a close below $425. The $550 area is our price target.