During the "Lightning Round" segment of " Mad Money" on Tuesday evening, a caller asked host Jim Cramer about Enphase Energy ( ENPH) .
"This is a high-multiple stock. I'd start half of a position here," said Cramer about the company that designs and manufactures software-driven home energy solutions.
We wrote about ENPH on Oct. 28 and said, "Weakness in the broader market could drag ENPH down to key support around $80 where traders could consider a new long position."
Prices behaved stronger than anticipated and only dipped towards $90.
Let's check and see what things look like today.
In this daily bar chart of ENPH, below, we can see that prices surged upward into January and February where they began a correction. Support has been developing toward $135, but that could be tested soon. Prices are below the declining 50-day moving average line. The rising 200-day moving average line intersects around $130 or so. The On-Balance-Volume (OBV) line has been trendless so far this year. The Moving Average Convergence Divergence (MACD) oscillator is ready to cross above the zero line for a new outright-buy signal.
In this weekly Japanese candlestick chart of ENPH, below, we can see several lower shadows since late February. This tells me that traders have been rejecting the lows for several weeks. The path of least resistance is likely to be higher. The OBV line looks like it is turning upward again this month. The MACD oscillator has been narrowing and could generate a new buy signal in the weeks ahead.
In this daily Point and Figure chart of ENPH, below, we can see a potential upside price target in the $242 area.
In this weekly Point and Figure chart of ENPH, below, we can see a potential upside price target in the $247 area -- not much different than the daily chart.
Bottom line strategy: Today's gap to the downside could be the start of a decline or we could see support materialize in the $135 area again. If support holds, aggressive traders might consider the long side of ENPH risking below the rising 200-day line. Conservative traders should wait for strength above $180 before buying.
