In his first Executive Decision segment of last Friday's "Mad Money" program, host Jim Cramer sat down with Nikesh Arora, chairman and CEO of Palo Alto Networks (PANW) , the cybersecurity giant.
Arora said Palo Alto's recently reported fiscal first quarter was its best in five years and proves that companies are finally beginning to take cybersecurity seriously.
According to research, Arora said, when a hacker discovers a vulnerability, you have up to five hours to patch it and protect yourself. Cybersecurity is the biggest risk companies face in today's world, Arora said, and that's why boards of directors need to be well-versed on the threats and the solutions.
Let's get well-versed in the charts and technical indicators of PANW.
On Nov. 9 we wrote, "We recommended the long side of PANW back on Sept. 15, writing "Continue to hold long positions as our $500 price target is near. Traders who are flat could probe the long side of PANW around $480 now risking $465. The $765 area is our new price target.' Raise stops to $479 while looking for $629 and then $765 longer-term."
In this updated daily bar chart of PANW, below, we can see that our long recommendation is progressing nicely. Prices made a new high close for the move up on Friday. Trading volume increased as prices rallied last week and that is supportive of further gains. PANW is trading above the rising 50-day moving average line as well as the bullish 200-day line. The On-Balance-Volume (OBV) line turned upward to tell us that buyers of PANW are more aggressive. The trend-following Moving Average Convergence Divergence (MACD) oscillator has crossed upward to a new buy signal. Price momentum (not shown) has been slowing in recent weeks to generate a bearish divergence but this indicator is not good with timing.
In this weekly Japanese candlestick chart of PANW, below, we see an interesting picture. Prices are in a longer-term uptrend above the rising 40-week moving average line. The chart shows a rising channel the past couple months and channels can yield either a new and stronger uptrend or at times can result in a downward reversal. In my experience there is no good way to anticipate which direction prices will go, but being aware of the issue is good. The most recent candle could be a high-wave candle with upper and lower shadows. This can be a top reversal pattern and could foreshadow either a change to a sideways trend or a change to a downtrend. The weekly OBV line is bullish and so is the weekly MACD oscillator.
In this daily Point and Figure chart of PANW, below, we can still see the $629 price target noted in our last review.
Bottom line strategy: Overall the charts of PANW are bullish but I always like to think about defense. Traders who are long PANW from our recommendations could raise stops to $490 from $479.
