• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Snap Charts Are Flashing Caution Signs

The company behind the Snapchat app has had a nice run, but its technical signals point to potential weakness in the coming weeks.
By BRUCE KAMICH
Dec 02, 2020 | 09:09 AM EST
Stocks quotes in this article: SNAP

The fast-paced Lightning Round segment of "Mad Money" is a viewer favorite. Tuesday's edition did not disappoint with one caller asking about Snap Inc. (SNAP) , the company behind the Snapchat camera app that lets people communicate via short videos and images.

Jim Cramer did not hesitate to advise the caller "I'd take out your cost and let the rest run."

Let's check out the charts of SNAP.

In this daily bar chart of SNAP, below, we can see some technical clues that are not positive. Prices gapped higher in late October on heavy turnover. SNAP continued to work higher into November but the volume declined sharply and the On-Balance-Volume (OBV) line struggled to move higher. A stock pushing up to new highs should attract more volume and buyers, but that does not look like the case for SNAP. Prices are trading above the rising 50-day moving average line but are twice the level of the rising 200-day moving average line and thus should be considered extended or overbought. The Moving Average Convergence Divergence (MACD) oscillator crossed to the downside in early November, generating a take profits sell signal.

In this weekly bar chart of SNAP, below, we can see the start of some weakness. Prices are still in an uptrend but are at the widest point over the 40-week moving average line that we've seen in the past three years. The weekly OBV line has not kept up with the price movement and is a bearish divergence as prices made a new high but the OBV line did not. The Moving Average Convergence Divergence (MACD) oscillator is still bullish but it has begun to narrow, and that can be the first sign of possible weakness ahead.

In this weekly Japanese candlestick chart of SNAP, below, we can see some potential reversal patterns, including a hanging man pattern in November with bearish confirmation last week. This is a potential top reversal pattern.

In this daily Point and Figure chart of SNAP, below, we can see a potential nearby price target of $49. This could be a case of more risk than reward.

Bottom line strategy: These four charts of SNAP suggest that SNAP could weaken in the weeks ahead. Cramer's advice of taking out your cost basis looks like a timely suggestion.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are prohibited from trading individual securities.

TAGS: Investing | Stocks | Technical Analysis | Consumer | Digital Entertainment | Media | Technology | Advertising | Mad Money | Real Money

More from Stocks

Rotation Is No Reason to Turn Away from the Markets

James "Rev Shark" DePorre
Jan 21, 2021 4:45 PM EST

Bears may fuss over the routine consolidation combined with rotational action, but here's how I look at the moves.

Jim Cramer: Housing Is Our Bridge

Jim Cramer
Jan 21, 2021 3:59 PM EST

Do not fear the housing sales boom -- this is good news and I'll tell you why.

Cord-Cutting FuboTV and Advertising Platform PubMatic Are Not Buys Here

Bruce Kamich
Jan 21, 2021 2:59 PM EST

Our look at the stocks of both FUBO and PUBM.

Hyliion Should Keep Truckin'

Timothy Collins
Jan 21, 2021 2:49 PM EST

I see a good trade down the road in this commercial fleet alternative-power truck name.

Jim Cramer: You Just Won Powerball, Now What?

Jim Cramer
Jan 21, 2021 2:24 PM EST

Remember, you only need to get rich once.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:16 AM EST CHRIS VERSACE

    Worst Stocks to Buy for the Biden Presidency

    Biden's take on the minimum wage, likely moves on ...
  • 08:35 AM EST GARY BERMAN

    Thursday Morning Fibocall for 1/21/2021

    SPX (Long-Term View) The 1/20/21 NEW high @ 3859...
  • 11:38 AM EST CHRIS VERSACE

    Best Stocks to Buy for the Biden Presidency

    President-elect Biden's massive stimulus plan, int...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login