The last time we reviewed Proofpoint Inc. (PFPT) , a while ago, we wrote, "After the measured move by PFPT ... a period of sideways price action should be expected over the intermediate term. In the near-term, we could see some follow-through strength above $90 and some spillover weakness below $83."
Looking back at the price action since early July I can smile at the forecast that was good until early January when prices started a new uptrend. Let's see how things look now.
In this daily bar chart of PFPT, below, we can see how prices started to make a higher low and higher high in December/January. Prices strengthened and closed above the rising 50-day moving average line. We can also see that a test of the rising 200-day line in early December was a buying opportunity. The pattern of volume in the histogram is neutral until February and March where the level of volume has been heavier.
The daily On-Balance-Volume (OBV) line has been moving sideways like prices from June through December. The OBV line has turned upward since January but the line has stalled somewhat this month. The trend-following Moving Average Convergence Divergence (MACD) oscillator has narrowed in recent sessions and could cross to the downside for a take profits sell signal.
In this weekly bar chart of PFPT, below, we can see that prices are and have been above the rising 40-week moving average line for most of the past two years. The weekly OBV line has been neutral/flat for much of the past two years and only shows a minor improvement in February. The slow stochastic indicator shows that prices are very overbought this year and we could see this condition alleviated by either a period of sideways price action or a decline.
In this Point and Figure chart of PFPT, below, we can see some distribution this month and a downside price target of $109.13.
Bottom line: The charts and indicators of PFPT are showing enough signals to be cautious and prepared for a retracement potentially back into the $110-$105 area. Longs should probably reduce their positions even if their cost basis is below $105. I really do not like riding a stock back down.