For his final "Executive Decision" segment of Mad Money Tuesday evening, Jim Cramer checked in with Jeff Lawson, co-founder, chairman and CEO of cloud-messaging service Twilio (TWLO) , to talk about the company and Lawson's efforts to help those in need this holiday season.
In April, Lawson helped found HelpKitchen, a charity that pays restaurants to use their excess capacity to help make meals for those in need. He said the effort has been a huge success, helping to keep restaurants in business while also feeding those who have been waiting for blocks to get meals through traditional channels.
Turning to the topic of Twilio, Lawson said that the messaging service has been assisting in multiple ways, from contact tracing to testing and vaccine locations. He said the pandemic didn't create the need for digital transformation, but it certainly accelerated the process of digitizing our interactions, adding convenience, and enabling all-new service options.
We last looked at TWLO back on October 26 where I wrote that "TWLO's earnings are due out after the close, but with a weak broader market I would take a cautious stance Monday and Tuesday at a minimum." Prices declined into the middle of November before bottoming and rallying again.
In this updated daily bar chart of TWLO, below, we can see that prices have rallied to new highs this month. TWLO is trading above the rising 50-day moving average line and above the rising 200-day line.
Trading volume has been nothing to write home about the past three months but somehow the On-Balance-Volume (OBV) line has managed to move higher telling us that buyers of TWLO have been more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator is in a bullish alignment above the zero line.
In this weekly Japanese candlestick chart of TWLO, below, we can see a mixed picture at this point in time. Prices are in an uptrend and trading above the rising 40-week moving average line. I would not consider prices extended or overbought versus the 40-week average.
The weekly OBV line is rising and that is a positive but the 12-week price momentum study shows lower highs from July to December even though prices made higher highs. This is a bearish divergence and tells us that the pace of the rally has slowed since July.
A rally slows for a number of reasons - valuations could be stretched, investors could be taking profits into strength, bulls are losing some conviction or some other reason. The message for technically oriented traders is that there is something different about the December rally versus the rally in the summer. This is a heads up for a possible correction.
In this daily Point and Figure chart of TWLO, below, we can see a potential price target in the $456 area. Not bad.
Bottom line strategy: There is a possible spinning top on yesterday's candle pattern and today could give us bearish confirmation. With a bearish divergence on the weekly chart we could be starting a pullback to the $340-$330 area in the weeks ahead. Longer-term I would look for new highs in the months ahead.