Aneel Bhusri, co-founder and CEO of Workday, Inc. (WDAY) , was on Mad Money's second "Executive Decision" segment Tuesday night, after the company had reported an "excellent" earnings results, Jim Cramer said. WDAY is a textbook secular growth play, the only issue is, the stock ran ahead of the quarter, he added.
In this daily bar chart of WDAY, below, we can see that prices made a small double bottom in October and November around $120, and then launched a strong rally into May. With the broad market under a considerable amount of selling it pays to recheck even stocks that have been strong the past five or six months.
WDAY is above its rising 50-day moving average line but we can see the line was tested a number of times since March. WDAY has survived all the tests so far but that is no guarantee of the future. The 200-day moving average is bullish but may be too far below the price action.
The daily On-Balance-Volume (OBV) line just made a new high for the move up which is bullish but the line has not moved up as much as prices have.
In the lower panel is the 12-day price momentum indicator which shows a pattern of weaker and weaker readings. This is a bearish divergence when compared to prices. This can foreshadow a possible reversal.
In this weekly bar chart of WDAY, below, we can see that prices have tripled over the past three years. The uptrend looks like it has turned parabolic this year as it moves away from the rising 40-week moving average line.
The weekly OBV line was neutral or sideways until this year when it broke out to a new high.
The weekly Moving Average Convergence Divergence (MACD) oscillator is well above the zero line in bullish territory.
In this Point and Figure chart of WDAY, below, we can see a possible downside price target around $185.
Bottom line strategy: Upside price momentum has slowed and the Point and Figure chart is projecting a downside price target. This is enough of a reason to become cautious despite WDAY's strong performance over the past three years. Protect recent longs with a stop below $190.