For his final "Executive Decision" segment of Mad Money Wednesday night, Jim Cramer checked back in with Vladimir Shmunis, chairman and CEO of RingCentral Inc. (RNG) , a stock Cramer last recommended in November. Shares of RNG are up 50% in calendar 2019.
Shmunis explained that RingCentral helps companies replace their legacy phone systems with new, cloud-based telephony services that include voice, video, collaboration and more. RingCentral brings communications to employees anytime, anywhere. RNG was also an early partner with Zoom Video (ZM) . Shmunis added that RNG services everyone from small companies to 45,000 seat enterprises.
Let's look closer at RNG. In the daily bar chart of RNG, below, we can see a consolidation pattern back in the October-December period. Unlike the broader market that was weak in the fourth quarter, RNG traded sideways and showed superior Relative Strength (RS). Prices have rallied sharply from late December.
RNG is above the rising 50-day moving average line and perhaps too far above the rising 200-day line. Prices look as extended as they were back in September. Is another correction coming?
The daily On-Balance-Volume (OBV) line shows a steady rise from November but this month it has not matched the gains in price and could be the start of a bearish divergence. We see the same early bearish divergence from the 12-day price momentum study, which is showing a lower high this month telling us that the pace of the price gains is slowing.
In the weekly bar chart of RNG, below, we can see that prices are up six-fold in the past three years. Could prices be overvalued? RNG is extended above the rising 40-week moving average line.
The weekly OBV line has not made much upside progress the past three months and is diverging from the price action. The weekly Moving Average Convergence Divergence (MACD) oscillator has made new highs for the move up but it just started to narrow (again).
In this Point and Figure chart of RNG, below, we can see that prices reached an upside price target. Reaching a price target is not a sell signal but it can suggest that technically oriented traders and investors could be taking profits. A decline to $115.37 would weaken the picture.
Bottom-line strategy: RNG is extended when compared to its longer-term moving averages. It is still in an uptrend but traders and investors should protect recent longs with a stop below $115.