Jim Cramer told viewers of Mad Money Thursday evening that we've seen a surge in special purpose acquisition companies, or SPACs, in recent months. Many of these SPACs are concentrated in the electric vehicle space, merging with smaller and riskier startups like Nikola Corp. (NKLA) . Cramer reiterated that investors need to be careful with these SPACs, as the hype rarely lives up to reality.
Investors looking for electric vehicles can invest in Tesla (TSLA) , Cramer said.
But there is one EV SPAC that might be interesting and that's Hyliion Holdings (HYLN) , makers of electric power trains for large trucks. Cramer explained that Hyliion owns its battery technology and has impressive software to boot.
That said, Cramer noted it's still early for Hyliion, and shares are likely to see more downside before they bottom. Under $20 a share however, he would be tempted to do some buying.
Let's check out the charts of HYLN.
In the daily bar chart of HYLN, below, we can see that prices have been cut in half in the past few weeks. Not a confidence builder. Prices are below the cresting 50-day moving average line but still above the 200-day line.
The On-Balance-Volume (OBV) line has been weakening since early September and tells us that sellers of HYLN have been more aggressive. The 12-day price momentum study continues to make lower lows and is not diverging from the price action. The pace of the decline has not slowed and that is not at all positive.
In this daily Point and Figure chart of HYLN, below, we can see that the software is projecting a bearish price target way down in the $3 area.
Bottom-line strategy: The fundamental story behind HYLN may be constructive but the charts right now show no sign of a bottom. Avoid the long side and let someone else show us the way.
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