Okta Inc. (OKTA) was rated a new outperform (buy) by a sell-side firm here on Wednesday, which set a $90 price target for the stock. In my Nov. 7 review of Okta I wrote, "The charts and indicators are bearish, and traders and investors should avoid the long side of OKTA." Let's check and see if things have changed for the better for the provider of identity authentication software.
In this updated daily bar chart of OKTA, below, I can see that prices languished for November and then gapped higher in early December. Prices gapped above the bottoming 50-day moving average line. OKTA is still below the declining 200-day line. Trading volume looks to be more active the past two months and the On-Balance-Volume (OBV) line moved up smartly in November and remained steady in December, signaling a shift from aggressive selling to aggressive buying. The Moving Average Convergence Divergence (MACD) oscillator crossed above the zero line in early December for an outright buy signal.
In this weekly Japanese candlestick chart of OKTA, below, I can see improvement over the past six weeks. Prices are still below the declining 40-week moving average line. A large white (bullish) candle at the end of November changed the picture. Trading volume in December has not continued to increase and that is an issue while the weekly OBV line still shows slow improvement from October. The weekly MACD oscillator made a higher low in October even though prices made a lower low. This is a bullish divergence but the indicator is still below the zero line.
In this daily Point and Figure chart of OKTA, below, I can see that prices reached and exceeded a price target in the $58 area.
In this second Point and Figure chart of OKTA, below, I used weekly price data. Here a price target of $107 is projected.
Bottom line strategy: The charts and indicators of OKTA have improved, but in this current unsettled market environment I am not in a rush to recommend purchase just yet. Further sideways price action with a rising OBV line is what I would like to see.
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
