For his final Executive Decision segment of "Mad Money" Thursday, Jim Cramer spoke with Jay Chaudhry, chairman CEO of Zscaler Inc. (ZS) , the cybersecurity company with shares up 11% for the year despite the recent market carnage.
Chaudhry said Zscaler has been busy helping customers navigate the work-from-home world. He said no one likes the old VPNs of the past, but Zscaler makes it easy for employees to connect no matter where they are. When asked about whether our Internet can handle everyone working from home, Chaudhry said it should be able to handle these new challenges without too much strain given the distributed nature of the Interne.
Let's check and see if the charts of ZS are getting strained or are bottoming
In this daily bar chart of ZS, below, we can see an interesting pattern. Prices declined from a peak in late July to a low in late October. ZS then rallied into late February. This month prices briefly broke down below the October low and then snapped back to the upside. This price movement reminds me of an old pattern called a bear trap. The trading volume tends to support this observation as activity did not increase when prices broke to a new low this month.
The daily On-Balance-Volume (OBV) line shows a slow upward drift from October, which suggests that buyers of ZS have been quietly more aggressive for several months. The Moving Average Convergence Divergence (MACD) is crossing to the upside for a cover shorts buy signal.
In this weekly bar chart of ZS, below, we can see that the March decline on the daily chart only looks like a retest of key support around $35 on this weekly chart. The weekly OBV line shows a decline from June and that is more bearish than the daily picture (above). The weekly MACD oscillator has moved up near the zero line and could give us a buy signal in the weeks ahead.
In this daily Point and Figure chart of ZS, below, we used a traditional even dollar increment for scaling. Here the software is projecting a potential upside price target in the $89 area. That's hard to imagine in this current market environment.
Bottom line strategy: If you have risk capital and can afford to risk below $40 you could approach the long side of ZS. Will the Point and Figure chart be correct about a rally to $89?