• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Zscaler Could Weaken Further If Nearby Support Is Broken

The question is how far down and how long the selling lasts.
By BRUCE KAMICH
Feb 21, 2020 | 08:57 AM EST
Stocks quotes in this article: ZS

Zscaler, Inc. (ZS)  just reported its fiscal second-quarter numbers after the close Thursday and traders and investors reacted bearishly to the mixed third-quarter guidance. ZS is trading much lower in early Friday action in the $57-$56 area. This has done some damage to the charts so let's see what strategy now makes sense. 

In the daily bar chart of ZS, below, we can imagine that prices are down sharply and under the declining 200-day moving average line. ZS will be in a position to test the late January lows and a break of those lows could precipitate further selling. Prices are still above the rising 50-day moving average line so the jury will be in deliberations for a while.

The daily On-Balance-Volume (OBV) line has been rising and could be a two-edged sword. On the one hand it tells us that buyers of ZS have been more aggressive and they might act as buyers on a decline OR these buyers might not have "deep pockets" and they become anxious sellers. We should see soon enough.

The Moving Average Convergence Divergence (MACD) oscillator was in a bullish configuration before earnings but this indicator could soon turn down for a sell signal. 

In this weekly bar chart of ZS, below, we don't have our normal three years of data to work with. Prices were above the bottoming 40-week moving average line as of Thursday but Friday's action could well change that.

The weekly OBV line shows some uneven improvement in recent months and the MACD oscillator gave a cover shorts buy signal back in December.  

In this daily Point and Figure chart of ZS, below, we can see that prices had nearly reached an upside price target. A decline to $54.70 would weaken this chart.  

Bottom-line strategy: Traders and algos are quick to run away from a company with disappointing results. We need to see how far down and how long the selling lasts but this could turn out to be an instance of selling first and asking questions later.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are prohibited from trading individual securities.

TAGS: Earnings | Investing | Stocks | Technical Analysis | Technology | Stock of the Day

More from Stocks

It's Easy to Overlook This Basic Rule of Investing

Paul Price
May 24, 2022 7:00 AM EDT

You can make big money via buying low. You just can't prove it until later.

Trading Places: Energy Takes Its 'QQQ' From Tech

Helene Meisler
May 24, 2022 6:00 AM EDT

Let's look at the charts of QQQ and QQQJ and line them up against energy and see what we get.

Stay Guarded Amid Rally's Rotation

James "Rev Shark" DePorre
May 23, 2022 4:41 PM EDT

Stocks spin, and that makes the market picture rather murky.

Dare I Recommend a Retail Name Like American Eagle Outfitters?

Bruce Kamich
May 23, 2022 3:15 PM EDT

Let's check out the charts.

Gravity Is Pulling on Apple

Mark Sebastian
May 23, 2022 2:32 PM EDT

Here's where I see AAPL going and how to play it.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 02:24 PM EDT PAUL PRICE

    An Interesting Chart

    I'm betting heavily that stocks will be way up aga...
  • 10:10 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    "Market Timing for Dummies"
  • 01:44 PM EDT STEPHEN GUILFOYLE

    Stocks Under $10 Portfolio

    We're making a series of trades here.
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login