In his "No-Huddle Offense" segment of Mad Money Thursday night, Jim Cramer said he learned an important lesson about curbing your enthusiasm.
Sometimes, he said, a story can indeed be too good to be true.
On Nov. 17, Cramer interviewed Lordstown Motors (RIDE) CEO Steve Burns, who indicated the company had orders for 500 vehicles, all of which were signed by CEOs. However, as we have learned, many of those orders may only have been letters of interest.
Let's check out two charts of RIDE.
In the daily bar chart of RIDE, below, we can see many rally failures to the $30 area from September to February. Every rally with the help of hindsight was an opportunity for someone to sell. Selling was not aggressive until November when we saw the first peak in the On-Balance-Volume (OBV) line. The OBV line rolls over in January-February and falls hard into March. Sellers of RIDE are definitely more aggressive sellers.
The Moving Average Convergence Divergence (MACD) oscillator is in a bearish alignment below the zero line.
In this daily Point and Figure chart of RIDE, below, we can see a potential downside price target in the $9 area.
Bottom-line strategy: As long as the charts are bearish and the fundamental story is not solid I would avoid the long side of RIDE.