For his second "Executive Decision" segment of Thursday's Mad Money program, Jim Cramer spoke with Nikesh Arora, chairman and CEO of Palo Alto Networks (PANW) , the cybersecurity company.
Arora said Palo Alto grew by 40% this quarter, thanks to their investments in the cloud, firewalls and artificial intelligence. The company continues to take market share and just delivered their best quarter in four years.
Cybersecurity remains of utmost importance to every company, Arora added, and no company can afford the economic chaos attacks could cause in our country. That's why Palo Alto is expanding their "zero trust" model to "zero trust, zero exceptions," because every facet of an organization needs to be equally secure.
Let's check out the charts ahead of the opening Friday with pre-market activity suggesting a sharply higher open.
We were positive on shares of PANW on April 1, but prices sank quickly in late April through this Thursday. With the shares indicated to open about 12% higher Friday we need to re-examine the charts.
In the daily bar chart of PANW, below, we can see that the shares broke below the rising 200-day moving average line earlier this month. The slope of the shorter 50-day moving average line turned negative.
Trading volume did not show a significant increase on this decline and the On-Balance-Volume (OBV) line showed only a modest amount of weakness from late March. It seemed that prices fell more of their own weight and perhaps because of the broad market weakness.
The Moving Average Convergence Divergence (MACD) oscillator is below the zero line but has narrowed in recent days.
In the weekly Japanese candlestick chart of PANW, below, we can see a mixed picture. Prices are in a decline below the cresting 40-week moving average line. The two most recent candles have lower shadows telling us that traders rejected the lows.
The weekly OBV line has weakened from December. The MACD oscillator has turned lower but is still above the zero line.
In this daily Point and Figure chart of PANW, below, we can see that the software as of Thursday was forecasting a downside price target in the $342 area. A trade at $508.13 may be needed to turn this chart bullish.
In this weekly Point and Figure chart of PANW, below, we can see a $205 price target.
Bottom-line strategy: PANW is poised to open higher and so is the broader market. This combination could propel PANW above its recent high around $500 in the days ahead. This strength, should it happen, should precipitate further gains in the next several weeks. Stay nimble if you are a buyer Friday.