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  1. Home
  2. / Investing
  3. / Stocks

Shopify Is About to Become the Latest 'Ten-Bagger': What to Do Next

Ahead of earnings, let's take a look at SHOP's charts.
By BRUCE KAMICH
Feb 16, 2021 | 11:07 AM EST
Stocks quotes in this article: SHOP

Jim Cramer told his Mad Money viewers Friday evening that on Wednesday he will be monitoring a number of tech earnings including Shopify (SHOP) . 

Ahead of those earnings, let's monitor SHOP's charts. 

We looked at SHOP back on Dec. 22 and wrote that, "What to do? It would be a lot easier if I had paid more attention to SHOP and the indicators and was able to recommend it closer to the breakout point around $1,100, but up here in the stratosphere the risk is different. The $1,516 price target is eye-popping but what do you risk? The best recommendation I have is to try to buy SHOP near $1,200 and then risk to $1,100. If prices don't dip to $1,200 or you can't afford a stop $100 away then do nothing. There are plenty of other stocks out there."

Traders did get a dip to buy SHOP in late December but they may have also gotten stopped out. 

In the updated daily bar chart of SHOP, below, we can see that SHOP has soared to new heights. Prices tested the rising 50-day moving average line at the end of January and the early days of February. The 200-day moving average line has a positive slope too but intersects about $500 below the price action.

The trading volume has been declining since November and might suggest that investors are starting to lose some of their enthusiasm for the stock. Others might suggest that the high per share price is lessening the turnover. The On-Balance-Volume (OBV) line shows a peak at the end of July and then a slow decline telling us that traders of SHOP have been neutral to slightly more aggressive sellers.

The trend-following Moving Average Convergence Divergence (MACD) oscillator is in a bullish alignment.  

 
In the weekly Japanese candlestick chart of SHOP, below, we find no bearish candles in the recent price action but we do see that prices are up nearly ten-fold from their base around $150 in 2018 and early 2019. The slope of the 40-week moving average line is bullish.
 
The weekly OBV line shows a small rise from late October and seems to be more constructive than the daily OBV line. The weekly MACD oscillator just crossed to the upside for a fresh outright buy signal. 
 
 
In this daily Point and Figure chart of SHOP, below, we can see an updated price target of $2,310. This is up from the $1,516 target we saw on Dec. 22. 
 
 
 
Bottom-line strategy: Finding and "riding" a ten-bagger is a trader's dream. A big enough position can be a real life changer. SHOP is about to become the latest ten-bagger for buyers back in 2018. Even though we now have a $2,310 price target from the Point and Figure chart I would still think long and hard about ringing the cash register around $1,500.
 
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TAGS: Investing | Stocks | Technical Analysis | E-Commerce | Mad Money | Earnings Preview

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