Last week Jim Cramer favored Splunk Inc. (SPLK) , an analytics company that reported earnings last week and can actually make a forecast despite Covid-19 and the work-from-home movement. Read his Real Money column here.
"Cloud is going through the roof for us." That's a statement from Doug Merritt, one of Cramer's favorite CEOs, whose company improves efficiency of web use and makes working from home more valuable.
The stock price has been very strong since the middle of March so let's check the charts.
In the daily bar chart of SPLK, below, we can see that the shares made a swift decline from February into March but have since climbed to a new high. Prices are above the rising 200-day moving average line and the rising 50-day line. The 50-day average is close to making a bullish golden cross above the slower-to-react 200-day average.
The daily On-Balance-Volume (OBV) line made a modest decline in February and March and now stands at a new high for the move up. The OBV line's strength tells us that buyers of SPLK have been more aggressive and confirm the price gains.
The trend-following Moving Average Convergence Divergence (MACD) oscillator is in a bullish alignment above the zero line.
In this second Point and Figure chart of SPLK, below, we used weekly price data and increased the reversals to five from three to filter out more "noise." Here the chart shows a possible longer-term price target in the $278 area. This target fits in with the price objective from the weekly bar chart (above).
Bottom-line strategy: SPLK looks extended on the upside so traders looking to go long should wait for a one or two-day pullback below $180. Risk a close below $170. The $260-$278 area is our longer-term price target.