During the Lightning Round of Mad Money viewers get to call in and ask Jim Cramer about stocks they are interested in. Buy, sell or hold in 30 seconds. One person called and asked about PayPal ( PYPL) Monday night. "I think PayPal is terrific. There's a lot of upside if they get it right," said Cramer.
Let's check and see if the charts have gotten the message.
In the daily bar chart of PYPL, below, we can see that prices made a peak in July and corrected lower into August. Dips into the $105-$100 area have seemed to find buying interest the past six weeks or so but the indicators are not strengthening. Prices are below the declining 50-day moving average line and testing the rising 200-day line.
The On-Balance-Volume (OBV) line turned down in late July signaling a shift from aggressive buying to aggressive selling. The Moving Average Convergence Divergence (MACD) oscillator moved below the zero line in late July for a sell signal.
In this weekly bar chart of PYPL, below, we can see that prices have tripled in the past three years. PYPL is testing the rising 40-week moving average line.
The weekly OBV line has been bearish the past three months and the MACD oscillator is pointed down toward the zero line.
In this Point and Figure chart of PYPL, below, we can see that there is a potential downside price target of $92 being projected.
Bottom-line strategy: The current correction in PYPL does not look much different from the one in late 2018, which was followed by new highs. Let PYPL continue to trade but keep an eye on the OBV line. If the OBV line turns up with prices then we'll want to return to the long side.
