For his second Executive Decision segment of Monday's "Mad Money" program, Jim Cramer spoke with Nikesh Arora, chairman and CEO of Palo Alto Networks (PANW) , a provider of cybersecurity software.
Arora said Palo Alto Networks has spent three years preparing for what it believed would be the future. That future included the cloud, artificial intelligence and a more security-aware corporate environment.
When asked how the company is able to retain so many of its customers, Arora noted that Palo Alto Networks is consistently rated the best vendor in six different categories and "no one gets fired for buying the best."
PANW was trading much higher before Tuesday's open after the company reported fiscal fourth-quarter adjusted earnings and sales that topped analysts' estimates and issued a revenue outlook higher than forecasts. We looked at the charts of PANW on Monday ahead of earnings but wrote, "The charts of PANW show some weakness this month. I have no special knowledge of what PANW will report but traders may want to step aside ahead of earnings. With a longer-term Point and Figure target of $527 we want to be a buyer of PANW at some point in the near term."
Let's check on the charts pf PANW again.
In this daily bar chart of PANW, below, we can imagine prices opening with a large gap to the upside. Prices are anticipated to open not only above the 50-day moving average line but at a new high. I would anticipate heavy trading volume today with the daily On-Balance-Volume (OBV) line moving higher. The Moving Average Convergence Divergence (MACD) oscillator should strengthen and we could see a crossover to the upside.
In this weekly Japanese candlestick chart, below, we can see the price action only through Monday. Using your imagination we should see a large white (bullish) candle by the close of trading today. The weekly OBV line should firm and the MACD oscillator should narrow.
In this daily Point and Figure chart of PANW, below, we do not show the pre-market activity. When this chart is updated later on Tuesday we should see a straight-up rally as Point and Figure charts do not show price gaps. All the prices from Monday's close to Tuesday's opening will be filled in. The software should then project an upside price target.
Bottom line strategy: On Monday the weekly Point and Figure chart of PANW showed a $527 price target.
