Jim Cramer told viewers of Mad Money Wednesday evening that the bubble in special purpose acquisition companies, or SPACs, may soon be coming to an end. Cramer said not all SPACs are created equal. He highlighted five previous SPAC recommendations and added five new ones to his list of those that can still be bought on any pullback or market weakness.
Cramer said as long as you're patient and buy gradually, investors can still be buyers of MP Materials (MP) , a rare earth mining company (see our technical review here). He also still recommended Star Peak Energy (STPK) , which will be merging with the energy storage company Stem. Others on his recommended list included Porch (PRCH) , pretzel maker Utz (UTZ) and DraftKings (DKNG) .
Let's check out DKNG again. We touched on the company briefly on Nov. 5, but a fresh look would be good.
In the daily bar chart of DKNG, below, we can see that prices have been retesting the early October peak. The shares have had a number of opportunities to break out to new heights but they have not been able the entire month. The rising 50-day moving average line was tested in January and the other day.
The trading volume has been declining since October and the On-Balance-Volume (OBV) line is well below its October peak and shows softness this month. A declining OBV line happens when sellers of a stock are more aggressive. The Moving Average Convergence Divergence (MACD) oscillator is below its October peak and is pointed down.
In the weekly Japanese candlestick chart of DKNG, below, we can see a large hanging man pattern. This is a top reversal pattern. Bearish confirmation is needed to increase the odds that this is a high.
The weekly OBV line is back up around its October peak and the MACD oscillator is slightly bullish.
In this daily Point and Figure chart of DKNG, below, we see that the software is projecting a downside price target in the $44 area.
Bottom-line strategy: I do enjoy watching some sporting events and following the UCONN basketball teams but betting does not really appeal to me. The same goes for the long side of DKNG right now. I would wait for a better buying opportunity.