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Trading Plug Power as the Stock Charges to New Highs

A $1.5 billion investment from SK Group has Plug Power surging to a 52-week high. Let's have a look at the chart after the rally.

Plug Power  (PLUG) - Get Plug Power Inc. Report was surging Thursday, currently up more than 27% in afternoon trading.

The stock was hitting its highest level in more than a decade as bulls continue to run wild with this name.

Plug Power, Blink Charging  (BLNK) - Get Blink Charging Co. Report, Nio  (NIO) - Get NIO Inc. American depositary shares each representing one Class A 蔚来汽车 Report, Tesla  (TSLA) - Get Tesla Inc. Report and others continue to display incredible relative strength vs. the rest of the market.

For instance, Tesla hit a new high again on Thursday, clearing a $750 billion market cap and making Elon Musk the richest person in the world in the process.

For Plug Power, shares rallied after a $1.5 billion investment from SK Group. That’s got bulls all revved up once again. Let’s turn to the charts.

Trading Plug Power

Daily chart of Plug Power stock.

Daily chart of Plug Power stock.

Given the move here, I would have expected the overbought/oversold measure — the Williams%R on the bottom of the chart — to be logging a higher reading.

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Admittedly, the stock is well off the session high near $47. But still, up over 27% should have this measure flying higher.

Some observers will suggest this means Plug Power has room to run. They could be correct and we’ll map the upside levels in that case. However, I see divergence on this reading, or an inability to make new highs even when the stock is.

That gives me pause.

From here, bull will want to see shares hold the two-times range extension near $44.60. Above that and Thursday’s high is in play. Above that — at $46.95 — and the 261.8% extension at $49 is on the table.

On the downside, look to see if Plug Power stock loses Thursday’s low at $43.16. Below that and the 161.8% extension could put the prior high in play at $37.51.

A dip to that level would almost fill the gap from today. It would also put the 10-day moving average in play, which will likely act as short-term support, as well the 21-day moving average. The latter has been support for the last few months.

It’s one thing to come into Thursday’s session either already long or carrying just a partial position after previously taking some profits from a lower entry point. It’s considerably harder to enter a stock up so significantly in the short term.

Take caution when trading this name and as always, use proper position size.