On Wall Street, you always want to know about new opportunities as early as possible. That's why Jim Cramer told his Mad Money viewers Wednesday night that when he's looking for new ideas, he goes right to the source: his kids.
Kids inherently know all about the future, including what's hot and what's not. Cramer said he wouldn't have known about Snap (SNAP) , which rose 28% Wednesday on blowout earnings, without a tip from his daughter.
Let's check out the charts and indicators.
In this daily Japanese candlestick chart of SNAP, below, we can see that prices made a large rising window (upside price gap in "Western" technical speak). Wednesday's candle shows a fair-sized upper shadow telling us that traders rejected the highs of the day. Trading volume was HUGE and can be a two-edged sword. Bulls like to see heavy volume on a breakout but 250 million shares in one day is something entirely different. With nearly 63 million shares sold short we may have seen a huge melt up as the shorts covered. I don't know that for certain but it is a possibility.
Trading volume was light and the On-Balance-Volume (OBV) line was hardly moving up since July.
The Moving Average Convergence Divergence (MACD) oscillator was very close to a bearish crossover before Wednesday.
In this weekly bar chart of SNAP, below, we can see that prices are up big from their $5 low in late 2018.
The weekly OBV line is pointed up but has hardly kept up with the price gains.
The weekly MACD oscillator is pointed up again but was close to a bearish crossover last month.
In this daily Point and Figure chart of SNAP, below, we can see the sharp advance in price with the prices filled in as if SNAP had actually traded there and not gapped higher. An upside price target around $29 was left in the dust.
In this weekly Point and Figure chart of SNAP, below, a potential longer-term price target in the $73 area is projected. This target may have to wait for next year.
Bottom line strategy: We last reviewed the charts of SNAP back on July 7 and wrote that, "Raise sell stops on longs to a close below $22 from a close below $19. Our price targets now are $29, $38-$40 and $47." With prices reaching our $38 price target I would now recommend nailing down your profits.