During Wednesday's "Lightning Round" segment of Mad Money, one caller asked Jim Cramer about Zillow (Z) : "Zillow is down for the year and it's doing quite well. I think now's a good time to buy," said Cramer.
Let's check out the charts... and see how much our house is worth today while we're at it.
In this daily Japanese candlestick chart of Z, below, we can see that prices made a spike top in February and then traded lower and lower. Prices are trading below the declining 50-day moving average line and below the cresting 200-day line. The On-Balance-Volume (OBV) has been in a decline since February and tells us that sellers of Z have been more aggressive for several months now.
The 12-day price momentum study shows higher lows from March to August. This is a bullish divergence as prices are falling but the indicator is rising. The pace of the Z has been slowing and that can sometimes foreshadow a rally.
In this weekly Japanese candlestick chart of Z, below, we see a mixed picture. Prices are trading below the cresting 40-week moving average line. The weekly OBV line shows weakness from February but it has not made a new low recently to confirm the new price lows.
The 12-week price momentum study shows higher lows for several weeks telling us that the pace of the decline has been slowing.
In this daily Point and Figure chart of Z, below, we can see a potential price target in the $94 area.
In this weekly Point and Figure chart of Z, below, we can see that the software is projecting a tentative $76 price target.
Bottom line strategy: Price momentum is a leading indicator and it is telling us that the decline in Z is slowing. Wait for two consecutive closes above $102 before probing the long side. Add to longs above $112.
