For his final "Executive Decision" segment of last Friday's Mad Money program on CNBC, Jim Cramer welcomed back Todd McKinnon, co-founder and CEO of Okta Inc. (OKTA) , a cybersecurity company. OKTA has rallied significantly the past year, but investing is about looking forward. McKinnon said the cloud remains a big trend for companies, and even non-tech companies are racing to build the best apps and provide customers with the best experiences. McKinnon said Okta's identity cloud helps make those services more convenient and more secure. Cramer said in a regular market, this stock would be a lot higher than it is, which makes it a buy. Before stepping into the breach on Okta, let's check out the charts and indicators.
In this daily bar chart of OKTA, below, we can see that prices tripled from December of last year to the September zenith around $75. Not bad. Since the September high, prices have corrected lower, with a successful test of the rising 200-day simple moving average line. Since late November prices have rallied back over the declining 50-day moving average line and the line is now bottoming. The daily On-Balance-Volume (OBV) line turned up in November and is about to make a new high for the move up. The OBV line can sometimes lead prices, and a new high for the OBV line should be bullish for the price of OKTA. The trend-following Moving Average Convergence Divergence (MACD) oscillator is above the zero line and rising for an outright go-long message.
In this weekly bar chart of OKTA, below, we can see an evolving bullish story. Prices are above the rising 40-week moving average line. There is only five weeks of overhead resistance in the $70-$75 area. The weekly OBV line corrected lower from September but may now be turning up again. The weekly MACD oscillator has been narrowing and could soon generate a new outright go-long signal on this longer time frame.
In this Point and Figure chart of OKTA, below, we can see that prices have met an upside price target of $65.21. A trade at $68.77 would be bullish as it would refresh the uptrend.
Bottom line strategy: With a good alignment of indicators, especially volume/OBV, I would trade OKTA from the long side. Traders could go long OKTA at current levels, risking below $57 and looking for a breakout to new highs and a price target of $100.