Cloudflare Inc. (NET) released its third-quarter results Thursday and they beat investors' expectations, which has pushed its shares higher in early trading here on Friday. In our last review of NET on Oct. 25 we were bullish and wrote, "If you are long NET hang on and raise your sell stop to $155. The $327 area is our next price target. I won't be too surprised if there is some stalling around the round number of $200."
Let's check and see if we can make any adjustments.
In this daily bar chart of NET, below, we can see that prices stalled or paused for a few sessions around $195 before shooting higher. Trading volume declined during the brief pause in the rally and that is typical; active traders typically are not as involved in consolidations as they prefer to participate in quickly moving market situations. The On-Balance-Volume (OBV) line has remained steady and the Moving Average Convergence Divergence (MACD) oscillator is bullish.
In this weekly Japanese candlestick chart of NET, below, we can see a string of white candles, telling us that the close is higher than the opening each week. This is bullish. Prices are approaching twice the level of the rising 40-week moving average line, so some analysts will be considering NET extended or overbought versus the 40-week line. The OBV line is bullish and so is the MACD oscillator.
In this daily Point and Figure chart of NET, below, we can see an upside price target in the $328 area.
Bottom line strategy: Traders who are long should raise sell stops to $170 from $155. Continue to look for gains to the $328 area.
