During the fast-paced Lightning Round segment of Mad Money Friday evening, one caller asked about Spotify (SPOT) : "I like this one very much. You want to buy Spotify," replied Jim Cramer.
Let's check out the charts of SPOT.
In this daily bar chart of SPOT, below, we can see a mixed picture. Prices have been correcting lower since late February. Prices are improving from a May low but are just below the declining 50-day moving average line. The slower-to-react 200-day line is pointed down.
The On-Balance-Volume (OBV) line has been in a decline for much of the past year and tells me that sellers of SPOT have been more aggressive for a long time.
The Moving Average Convergence Divergence (MACD) oscillator crossed to the upside last month for a cover shorts buy signal. The MACD oscillator is now close to crossing the zero line for an outright buy signal.
In this weekly Japanese candlestick chart of SPOT, below, we can see that prices are trading below the declining 40-week moving average line. The weekly OBV line has been pointed downward since early December. The MACD oscillator is below the zero line in sell territory. On the plus side are two lower shadows below $220.
In this daily Point and Figure chart of SPOT, below, we can see a potential upside price target in the $315 area.
Bottom line strategy: It looks like SPOT has corrected enough in price and time so we should see prices attempt and recovery rally to the $315 area. Traders could probe the long side at current levels risking to $212. $315 is our price target.
