During the fast-paced Lightning Round of Mad Money Thursday night, Jim Cramer was asked about Nutanix Inc. (NTNX) : "They are competing with VMware (VMW) . I'm struggling to see the bottom."
Looking for bottoms in stocks is my thing along with tops so let's check out the charts of NTNX.
In the daily bar chart of NTNX, below, we can see that prices have been in a downtrend the past twelve months with the stock losing two-thirds of its value. Ouch.
A number of gaps to the downside have punctuated the decline. NTNX is trading below its declining 50-day moving average line and the weakening 200-day line.
The daily On-Balance-Volume (OBV) has been in a decline, which tells us that sellers have been more aggressive.
In the lower panel is the 12-day price momentum study which shows higher lows from March to Jun to July while prices have made lower lows. This tells us that the decline is slowing and that creates a bullish divergence when compared to the price action. It may take more than this divergence to help NTNX formed a bottom.
In the weekly bar chart of NTNX, below, we can see that prices have been in a downtrend and below the declining 40-week moving average line. The weekly OBV line has been in a decline since early 2018 suggesting a significant amount of distribution (selling).
The 12-week price momentum indicator is showing equal lows in May and July which is a bullish divergence versus price.
In this first Point and Figure chart of NTNX, below, we can see a nearby potential upside price target of $22-$23.
In this second Point and Figure chart we used closing data and the software is projecting a downside price target around $13.
Bottom-line strategy: With more risk on the downside ($13) than potential on the upside ($22-$23) I would not look to be a buyer of NTNX.
