We last checked out the charts of Palo Alto Networks Inc. (PANW) in early July, and we gave a two-handed strategy: "Bottom line: the bar charts look more bearish than bullish, while the Point and Figure chart could break in either direction. To try to reduce whipsaws, I would follow strength above $140 and weakness below $129." Looking back at the price action since July 7th we find our levels of $129 and $140 probably did not produce gains -- there was no follow-through selling below $129 and PANW gaped above $140 initially so we got whipsawed more than prices did.
Let's take the time to review the charts and indicators again to see if we can catch a sustained move to the upside.
In this daily bar chart of PANW, below, we can see that prices are between the flat to declining 50-day moving average line and the flat to declining 200-day line. Prices are also between minor resistance starting at $145 and support starting at $135. The daily On-Balance-Volume (OBV) line shows a drift higher from its March/April lows with declines and rallies that mirror the price movements. The trend-following Moving Average Convergence Divergence (MACD) oscillator is below the zero line but could be crossing to the upside for a cover shorts buy signal.
In this weekly bar chart of PANW, below, we have more reasons to question the ability of PANW to rally. Prices are above the 40-week moving average line but the slope of the line is now pointed down. The weekly OBV line shows a zigzag pattern to the downside since late May. The weekly MACD oscillator is above the zero line but the two moving averages that make up this indicator are crossing to the downside to a what will probably become a take profits sell signal.
In this updated point and figure chart of PANW, below, we can see a small distribution pattern and a $131.63 downside price objective. A rally to $147.95 is needed to strengthen the chart picture.
Bottom line -- PANW might continue to whipsaw traders but I would look to go long above $150 and weakness below $130 could precipitate further losses.