In his Real Money column "Let the Froth Wash Out," Jim Cramer talked about which stocks are safe to own and which might be risky in this current market environment. He pointed out the risks in some bank stocks and said that a safer stock would be PayPal Holdings Inc. (PYPL) , which had strong earnings and far less risk.
Let's check out the charts of this payment system company.
In the daily bar chart of PYPL, below, we can see that prices regained their lost ground in just four weeks from late March to late April. This month prices have made new highs and recently gapped to the upside. Prices have been holding in a tight trading range the past few days and the risk to me is if prices gap lower.
This kind of price action could be what old time traders like myself call an island reversal. Prices are above the rising 50-day and the rising 200-day moving average lines but they react to the price movement and do not lead it.
The On-Balance-Volume (OBV) line has been strong since early April but shows a recent peak. The Moving Average Convergence Divergence (MACD) oscillator has begun to narrow and tells us that PYPL is starting to lose some of its trend strength.
In this weekly Point and Figure chart of PYPL, below, we can see a potential longer-term price target of $275.