We last reviewed cybersecurity name Proofpoint Inc. (PFPT) in late March, writing, "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."
The volume of trading declined and PFPT stopped short of the $110-$105 area and it has since rallied to new highs. Technical analysis is not a crystal ball. Online commissions are very low so if we need to get back in the hurdle is low. (Proofpoint was one of the cybersecurity names discussed in the latest Mad Money Recap from Jim Cramer.)
In this updated daily bar chart of PFPT, below, we can see how prices did not retest the rising 50-day moving average line like they did in February. When buyers (or sellers) come in at levels better (or worse) than expected you need to take notice. When buyers show up above a support point it means they are anxious to buy and put money to work. This is what appears to have developed with PFPT.
The daily On-Balance-Volume (OBV) line did not turn lower at the end of March telling us that sellers of PFPT did not get more aggressive. The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed to the upside last week for a fresh outright buy signal.
In this weekly bar chart of PFPT, below, we can see that prices are above the rising 40-week moving average line. The weekly OBV line is showing some improvement the past two months and the MACD oscillator remains in a strong move to the upside. No weakness indicated from this indicator.
In this Point and Figure chart, below, we can see the recent double top breakout at $124.93. An upside price target of $138.53 is being projected.
Bottom line: If you reduced your long position in PFPT, now is the time to get back in. Traders could add to longs at or below $125, risking below $110. The $138-$140 is our next price target.