Too many people are missing out on the great gains in the cloud computing stocks, Jim Cramer told Mad Money viewers Wednesday night. That's why he listed 10 of his favorite companies in this growing sector.
Cramer started off with Splunk (SPLK) , which helps provide analytics for machine-generated data. Let's check out the charts and indicators of this company.
In this daily bar chart of SPLK, below, we can see a small triple bottom pattern in October-December followed by a rally to a late February high. Since then prices have been in wide swinging sideways market the past seven months.
SPLK has crossed above and below the 50-day moving average line several times. Prices are above the rising 200-day line and bounced off the line in late June and so far this month.
The trading volume shows some spikes on sharp declines which has translated into a declining On-Balance-Volume (OBV) line from late February. A weak OBV line suggests that sellers of SPLK have been more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator is below the zero line in sell territory but poised to turn up.
In this weekly bar chart of SPLK, below, we can see a mixed to bearish picture. Prices are above the rising 40-week moving average line but the line has been tested this month. Trading volume has diminished this year suggesting that the bulls are losing their conviction.
The weekly OBV line shows a decline from early 2018 so the OBV line has been diverging from the price action.
The weakening MACD oscillator has been weak for more than a year and it too has diverged from the price action.
In this first Point and Figure chart of SPLK, below, we can see that the software has project a small downside price target of $115.78.
In this second Point and Figure chart of SPLK, below, we used weekly data and here we see a possible downside price target of $106.
Bottom line strategy: For the past seven months SPLK has been unable to make a sustained move above the $135-$140 area. This suggests that maybe the path of least resistance is down. Be prepared for a test of the early June low.
