For his Executive Decision segment of Wednesday's "Mad Money" program, Jim Cramer spoke with Todd McKinnon, chairman and CEO of Okta (OKTA) , and Eugenio Pace, CEO of Auth0, the identity management service that is now a part of the Okta family.
McKinnon said there is no standard when it comes to identity services and Okta helps companies connect and integrate more than 7,000 different applications into a single, secure solution. Pace said Auth0 brings a developer focus to the Okta platform, giving developers all the tools they need to build better, more secure applications.
Let's check out the charts of OKTA.
In this daily bar chart of OKTA, below, we can see that prices have been making a pattern of higher lows and lower highs since February. Technical analysts call this a triangle pattern. Some may call it an equilateral triangle, but we don't need to dwell on the name as much as what this pattern suggests. The powers of buying and selling have been getting tighter and tighter as the downtrend line along the highs and the uptrend line along the lows (use your imagination) is getting closer to an apex. OKTA has crisscrossed the 50-day and 200-day moving averages several times and that is typical of a sideways pattern. Trading volume has been shrinking, but the On-Balance-Volume (OBV) line shows strength from early June and tells us that beneath the surface buyers of OKTA have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator is turning upward for a fresh cover shorts buy signal.
In this weekly Japanese candlestick chart of OKTA, below, we can see a better or clearer picture of this large triangle formation. Triangles are continuation patterns, which means they normally continue the trend that was in force before the pattern. In this chart the prior trend is up.
In this daily Point and Figure chart of OKTA, below, we can see a potential upside price target in the $282 area.
In this weekly Point and Figure chart of OKTA, below, we used close-only price data and a five-box reversal filter. Here the software projects a large upside target in the $539 area.
Bottom line strategy: I like to see patterns play out, but I also try not to tell the market what to do, thus, I would go long OKTA on strength above $260 and $270. Risk to $220.