For his final "Executive Decision" segment of Mad Money Wednesday night, Jim Cramer checked in Todd McKinnon, chairman and CEO of cybersecurity company Okta Inc. (OKTA), which just delivered another strong quarter.
McKinnon said that anyone who has dealt with multiple logins and passwords knows, establishing your identity is both critically important and a total pain. That's why Okta's technology helps companies provide better experiences. This is especially important in today's world, he said.
McKinnon added that using the cloud, Okta can provide a unified picture with state-of-the-art monitoring and protection. Once you're in the cloud, companies are free to use whichever apps and services they desire, McKinnon said, which is why Okta partners with so many technology leaders.
On Dec. 9 we were skeptical of the rally continuing and wrote that, "The longer-term outlook for OKTA remains fine for now, however, the short-term picture remains problematic and vulnerable. I am certainly not a young investor so I would avoid the long side of OKTA into January and maybe February as the bearish divergences play out."
Let's check out the OKTA charts again.
In the updated daily Japanese candlestick chart of OKTA, below, we can see some "problems" between the price action and our go-to indicators. Indicators are just derivatives of the price action so reading the price action comes first. OKTA has continued to move higher in December despite my worries. Prices have made some new highs but we have also seen some short-term dips.
The On-Balance-Volume (OBV) line has slowly edged higher, which is constructive but the 12-day price momentum study continues to diverge from the price action - -prices making new highs but the momentum study making equal highs.
In the weekly Japanese candlestick chart of OKTA, below, we can see the same "issues" we pointed out one week ago. Prices have made new highs but the weekly OBV line has just broken out to a new high. It might do it this week but maybe it doesn't.
The 12-week price momentum study in the lower panel still shows a bearish divergence from July to December with lower highs when prices have made higher highs. The rally has slowed and that is a red flag to me.
In this Point and Figure chart of OKTA, below, we used daily price data. A $337 price target is being projected but the chart needs a trade at $268.78 to refresh the uptrend. We'll be watching.
Bottom-line strategy: Technical analysis can be more experience-driven and subjective-sensitive than other methods of analysis and thus never 100%. But I prefer the approach and try not to be too stubborn for too long if my strategy is wrong. For now I continue my position that, "the longer-term outlook for OKTA remains fine for now, however, the short-term picture remains problematic and vulnerable."