In a confusing market, investors should always be prepared to fall back on long-term secular themes, like the coming 5G wireless build-out. Keeping that in mind, Jim Cramer added three new names Friday night during his Mad Money program on CNBC.
VMware (VMW) , makers of virtualization software that's now being used by telco providers as part of 5G implementations. Cramer said he's always been a fan of VMW and now he likes the company even more. Next was a pair of chip makers, Silicon Laboratories (SLAB) and Marvell Technology Group (MRVL) . Cramer said both of these companies are poised to win big as they have the best 5G chips for the job. MRVL also has a diversified portfolio of chips in other hot sectors including the Internet of Things and automotive. Let's check out the charts this morning.
In this daily bar chart of VMW, below, we can see that while prices are above the rising 50-day moving average line and the 200-day line, we can see some weakness. Trading volume has declined from early March telling us that more buyers have not been supporting the rally.
The daily On-Balance-Volume (OBV) line has been "rolling over" the past two months and the 12-day momentum study shows lower peaks from February to May while prices made higher peaks.
This difference is a bearish divergence and tells chart watchers that the rate of the advance has been slowing. A slowing pace of an advance can foreshadow a top reversal.
In this weekly bar chart of VMW, below, we can see a mixed longer-term picture. Prices have more than tripled the past three years so we have significant profit taking.
VMW is still above the rising 40-week moving average line but the weekly OBV line has not kept pace with the price movement.
The weekly MACD oscillator narrowed last week and that could be the start of a peak in this indicator.
In this daily bar chart of SLAB, below, we can see a base pattern from October to April but the rally in April and early May has not been all that strong.
Prices did rally above the rising 50-day moving average line and the bottoming 200-day line but the volume does not show a strong rise the past six weeks and the daily On-Balance-Volume (OBV) line has not moved all that much higher.
The daily Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside for a take profits sell signal.
In this weekly bar chart of SLAB, below, we can see a possible double top formation from around $110.
Prices are still above the now rising 40-week moving average line but notice the movement of the daily On-Balance-Volume (OBV) line which is showing a much lower peak now versus last June. This is a significant bearish divergence.
The weekly MACD oscillator is above the zero line in bullish territory but that may not last long.
In this daily bar chart of MRVL, below, we can see a mixed chart and indicator picture. MRVL is above the rising 50-day moving average line and is now rising 200-day line. A bullish golden cross of these two averages in seen back in the middle of March.
The OBV line shows a peak in April along with the MACD oscillator. A pullback to support around $30 seems likely.
In this weekly bar chart of MRVL, below, we can see a similar pattern to the weekly SLAB chart (above).
Prices made roughly equal peaks around $25 but notice the significantly lower OBV peak. Buyers of MRVL were much less bullish in March and April.
The weekly MACD oscillator has started to narrow too.
Bottom line strategy: 5G is indeed a long-term secular theme that investors should check out but the short-to-intermediate term traders and investors should be patient before probing the long side.