Believe or Not, This Stock May Not Rally ForEVER

Not every uptrend is worth buying -- even EverQuote's.

During the popular Lightning Round segment of Mad Money Wednesday night, one caller asked Jim Cramer about  EverQuote Inc. (EVER) . "People love these companies and I'm not going to fight the tide," replied Cramer.

EverQuote is an online insurance marketplace that offers users auto insurance quotes from multiple car insurance companies. The stock has made a big run so let's check on the charts.

In the daily bar chart of EVER, below, we can see that prices are up four-fold in the past 12 months. Prices are above the rising 50-day moving average line and looks extended above the rising 200-day moving average line.

The On-Balance-Volume (OBV) line has moved higher the past year but in recent weeks it has stalled while prices have moved still higher. This difference is a bearish divergence and bears watching closely as it can be a subtle clue about weakness ahead.

The Moving Average Convergence Divergence (MACD) oscillator has been weakening since the middle of May. 

 

 

In the weekly bar chart of EVER, below, we can see that prices are up more than 10-fold from their 2018 low. Prices are above the rising 40-week moving average line and probably too far above it.

 

The weekly OBV line has been diverging from the price action since February and its weakness does not support nor confirm the price advance so far this year. The MACD oscillator has been narrowing the past three weeks and tells us that the strength of the rally is fading. 

 

 

In this daily Point and Figure chart of EVER, below, we see a possible downside price target of $47. 

 

 

Bottom-line strategy: I am finding enough bearish clues on the charts and indicators of EVER to recommend standing aside. Not every uptrend is worth buying. 

Employees of TheStreet are prohibited from trading individual securities.