In his first Executive Decision segment of Monday's "Mad Money" program, host Jim Cramer spoke with Josh Silverman, CEO of Etsy (ETSY) , the online artisan marketplace. Shares of ETSY rose 7% on Monday after the company announced the acquisition of Elo7, which is already regarded as "the Etsy of Brazil."
Silverman said Elo7 was modeled after Etsy and is well-positioned and the perfect marriage. Elo7 boasts 56,000 sellers that offer over eight million items for sale to 1.9 million registered buyers.
Silverman was also excited about Depop, its marketplace for clothing. He said apparel is a huge untapped market.
Let's check out the charts of ETSY. Our last review of ETSY was on March 30, when we wrote, "The charts of ETSY have been rolling over and look vulnerable to further price weakness. Continue shopping on the website, but I would be in no rush to purchase the stock."
In this daily bar chart of ETSY, below, we can see that prices declined into early May. Prices gapped below the rising 200-day moving average line but did not collapse. It took most of May and June for prices to stabilize and recover. ETSY is now back above the 50-day moving average line and the 200-day line. The On-Balance-Volume (OBV) line bottomed in early June and has risen, telling us that buyers of ETSY are once again more aggressive. The Moving Average Convergence Divergence (MACD) oscillator is about to cross above the zero line for a new buy signal.
In this weekly Japanese candlestick chart of ETSY, below, we can see a couple lower shadows in early May, telling us that traders rejected those lows. Prices are back above the rising 40-week moving average line. The weekly OBV line shows strength in June to confirm the price gains. The MACD oscillator is still above the zero line and narrowing toward a new buy signal.
In this daily Point and Figure chart of ETSY, below, we can see a potential price target in the $260 area.
Bottom line strategy: We did not go long ETSY in May or earlier this month so we are a little late to the game. Traders could go long ETSY around $195 while risking to $170 for now. The $260 area is our price target.