Five nights a week investors get to ask Jim Cramer about their stocks during the Mad Money "Lightning Round." Cramer said this about Five Below, Inc. (FIVE) Tuesday night: "This is the right level to buy. I like it here." Let's take five minutes and look at the charts Wednesday. It never hurts to combine techniques.
In the daily bar chart of FIVE, below, we can see an uptrend from last November that peaked in early September. From the September zenith we can see a new pattern of lower highs and lower lows. Prices are now below the declining 50-day moving average line but above the still rising 200-day moving average line.
The daily On-Balance-Volume (OBV) line shows a rise into September and then a slow turn lower. A declining OBV line is a sign that sellers have become more aggressive.
In the lower panel is the Moving Average Convergence Divergence (MACD) oscillator which just turned below the zero line for an outright sell signal.
In the weekly bar chart of FIVE, below, we can see that prices are still above the rising 40-week moving average line. The weekly OBV line has not kept up with prices for months and that is a very large bearish divergence.
The weekly MACD oscillator has crossed to the downside for a take profits sell signal.
In this Point and Figure chart of FIVE, below, we can see a bearish downside price projection in the $79 area.
Bottom-line strategy: With several sell signals on FIVE I cannot be encouraged about its future. Prices could recover into year-end but a close below $95 where support and the 200-day average would be broken is a looming negative for the company.