During "Mad Money" on Tuesday evening, a caller asked Jim Cramer about Scorpio Tankers (STNG) .
"You have to be very careful. People trade this stock, they don't own it for the long term."
Let's check out two charts.
In this daily bar chart of STNG, below, we can see that prices stopped cold at the underside of the declining 200-day moving average line and quickly retreated to the rising 50-day moving average line. The trading volume has been increasing all year and tells me that perhaps too many people have rushed into this name. The On-Balance-Volume (OBV) line rose sharply in April and has been declining just as fast. The Moving Average Convergence Divergence (MACD) oscillator has quickly crossed to the downside for a take profits sell-signal -- unfortunately off the peak in prices.
In this daily Point and Figure chart of STNG, below, we can see the rapid run up and now the quick decline. A downside price target in the $16 area is indicated.
Bottom line strategy: It is never a good sign when money moves out of a stock as quickly as it moved in. Avoid the long side of STNG.
