During Wednesday's "Mad Money" program, Jim Cramer told viewers that in the speculative camp investors are gambling with shares of Workhorse Group Inc. (WKHS) , a tiny company that's losing a fortune and only has a float of 73 million shares.
We drilled down on two charts of WKHS this morning and did not like what we saw.
In this daily candlestick chart of WKHS, below, we can see the dramatic rise in prices in recent days. I favor using candlestick charts when trying to zero in on a turning point, which this kind of chart excels in. Thursday's candle pattern is the eighth record high of an eight-to-10 record high pattern. Prices are rejecting the highs today as we see an upper shadow. The On-Balance-Volume (OBV) has been rising with the price action, but I am watching the price momentum study closer. The first lower bar on the momentum study could be the first leaf to fall from a tree in autumn -- a leading indicator.
In this second candlestick chart of WKHS, below, we used 15-minute candles. In the lower panel is the momentum study and we can see a lower high being made Thursday, even though prices made a higher high intraday. This is a bearish divergence and could mean that some traders have begun to sell into strength.
Bottom line strategy: Some or many people believe it is foolish to attempt to pick tops and bottoms. I believe it is possible if you use the right tools. WKHS has made a huge rise and is vulnerable to a reversal. Do not overstay your welcome.