We recently wrote about Palo Alto Networks (PANW) , but the upside gap this morning warrants a fresh look. It was just a couple of weeks ago that we said, "We are going to give PANW the benefit of the doubt and favor the upside. Strength above $122.47 will help improve the picture but the huge bearish gap remains a significant obstacle."
PANW is trading about $20 higher after the opening bell so the $64,000 question is what to do now? Let's see how the charts and indicators looked through Wednesday's close.
In this daily bar chart of PANW, below, can see that there was continued sideways trading following our May 19 review. Sideways is better than down but not as positive as a rise, but it doesn't pay to argue with the market. PANW did not break over $122.47 (see our comments above) so we probably would not have been a buyer ahead of today's gap. The moving averages did not move much. The On-Balance-Volume (OBV) line was neutral and the Moving Average Convergence Divergence (MACD) oscillator stayed above the zero line.
In this updated weekly chart of PANW, below, we can see that prices would be testing the still declining 40-week moving average line. The weekly OBV line turned up in the past few weeks signaling more aggressive buying and the weekly MACD oscillator crossed to a cover shorts buy signal.
In this Point and Figure, below, we don't have the latest price inputs but we do have a potential price target of $150.
Bottom line: I usually don't sit on the fence when it comes to an opinion on a stock, but with this upside gap on PANW I want to see more price action. Sorry. Will PANW hold onto the bulk of the gains today? Or will we see that prices close off their highs? Technical analysis is more like a windsock at the airport than a crystal ball.