CyberArk Software Should Take On Water

 | May 19, 2017 | 8:28 AM EDT
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The charts and indicators of security software company CyberArk Software (CYBR) have weakened in recent weeks despite the news of more global threats. Earlier this month prices gaped lower and they are now poised to test and maybe break the lows of October and December. A break of these key lows is likely to turn the major trend down.

Let's check the strength of our passwords and see what the updated charts and indicators suggest. When we last looked at CYBR at the end of March, we concluded that "Strength above $54 could mean CYBR is headed higher while weakness below $46 may indicate CYBR will decline to the low $40s. My gut is leaning to a downside break, but that is not a disciplined approach."

 

In this daily bar chart of CYBR, above, we can see can see that CYBR did push briefly above $54 but that the rally fizzled quickly and now prices are back to $46 -- our other key level. Prices of CYBR are now below the declining 50-day moving average line and the declining 200-day moving average line. The daily On-Balance-Volume (OBV) line turned down quickly and sharply this month as traders and investors voted with aggressive selling. In the lower panel the 12-day momentum study is not showing a bullish divergence, so our favorite leading indicator is not suggesting a rebound.

In this weekly bar chart of CYBR, above, we can see all the trading history of this company. Prices are now below the declining 40-week moving average line. Prices look poised to test the lows of October and December. The weekly OBV line has been neutral for several months but has edged down in the past two weeks. The trend-following Moving Average Convergence Divergence (MACD) oscillator is crossing below the zero line for an outright sell signal.

In this Point and Figure chart of CYBR, above, the intraday extremes are not plotted along with gaps. This chart shows that $45 is a key level and that a trade at $44 will open the way for a decline to $41.

Bottom line: CYBR could bounce in the short term, but our trending indicators suggest further weakness. Keep your powder and your ship dry.

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