In the fast-paced "Lightning Round" of Jim Cramer's Mad Money program Monday night Jim was bullish on the prospects for World Wrestling Entertainment (WWE) . In full disclosure I have not watched their programming in years but I did look at the charts and indicators Tuesday morning. The stock is not down for the count but we could see prices weaken a bit more and struggle in the weeks ahead.
Let's get in the ring and check it out.
In the daily bar chart of WWE, below, we can see prices are trading below the declining or bearish 50-day moving average line. Prices are still above the rising 200-day line but a test of that indicator could be in store in the near-term.
The daily On-Balance-Volume (OBV) line shows a bullish rise to late September and then the start of a decline. A downward slanted OBV line tells me that sellers of WWE have been more aggressive with heavier volume be traded on days when the stock closes lower.
The Moving Average Convergence Divergence (MACD) oscillator is in bearish territory below the zero line but we could see a cover shorts buy signal in the days ahead.
In the weekly bar chart of WWE, below, we can see that prices are up around five-fold from their nadir in early 2016. Prices are above the rising 40-week moving average line but we could see a test of that indicator in the weeks ahead.
The weekly OBV line has not matched the price gains the past four months and suggests that the gains will not be sustained. The weekly MACD oscillator has crossed to the downside for a take profits sell signal.
In this Point and Figure chart of WWE, below, we can see a bearish price target of $59.
Bottom-line strategy: With a number of bearish signals on the charts, traders and investors should be cautious about getting in the ring with a stock that could trade lower.