• 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
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Stocks

Zscaler Stands to Weaken After Issuing Conservative Growth Outlook

The stock of the cloud security company isn't a long candidate at present.
By BRUCE KAMICH
Dec 02, 2022 | 08:17 AM EST
Stocks quotes in this article: ZS

Zscaler Inc. (ZS) is trading lower in premarket activity here on Friday on the heels of a disappointing growth forecast. In my last review of the cloud security company on Sept. 9 the picture was positive, but things changed, so let's check out the charts and indicators of Zscaler again.

 
In this updated daily bar chart of ZS, below, we can see that prices continued up but made a high on Sept. 10 and worked in three waves to a low in early November. Prices rallied toward the underside of the declining 50-day moving average line but failed. ZS trades below the bearish 50-day average line and below the bearish 200-day line. The trading volume shows us an uneven pattern that does not have follow-through strength. The On-Balance-Volume (OBV) line shows weakness from early September, telling us that sellers of ZS are more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator is bearish.
 
 
In this weekly Japanese candlestick chart of ZS, below, we see a mixed picture that could turn bearish when the latest weekly candle pattern is plotted. Prices are in a longer-term downward trend as they trade below the bearish 40-week moving average line. The most recent candle is a potentially bullish hammer pattern. I say potentially because there are two problems.. First, the pattern is not in a downtrend but rather in a sideways trend. Second, it is now unlikely that this week's candle will give us bullish confirmation of last week's hammer. The weekly OBV line has been flat the last four months and that does not help the bull case. The MACD oscillator is bearish.
 
 
In this daily Point and Figure of ZS, below, we can see a bullish price target. A trade at $121.25 is needed to turn this chart bearish.
 
 
In this second Point and Figure chart of ZS, below, we used weekly price data. Here the software projects a downside price target of just $86.
 
 
Bottom line strategy: Traders should avoid the long side of ZS. If prices break the early November lows we are likely to see further declines.
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 | Cybersecurity | Software & Services | Real Money

More from Stocks

5 Factors to Watch in an Oversold Bounce

James "Rev Shark" DePorre
Oct 4, 2023 11:35 AM EDT

If you're stalking a counter-trend upswing in the market, then pay attention to how these scenarios play out.

Apple to the Core: Is It Better to Reduce Than Add Here?

Stephen Guilfoyle
Oct 4, 2023 10:45 AM EDT

The firm's products are profitable, but they are just the key. The key that unlocks much higher margin businesses elsewhere and going forward.

What's Next for Bank of America as the Charts Turn Ugly?

Bruce Kamich
Oct 4, 2023 9:50 AM EDT

Future declines may be likely.

The Uglier Equities and Economic Conditions Get, the More Conservative I Become

Bret Jensen
Oct 4, 2023 9:30 AM EDT

My portfolio definitely isn't sexy as it is focused more on preserving capital than aggressively trying to grow it.

Tom Lee: When a Trade Becomes Obvious, That's Often When the Trend Can Reverse

Tom Lee and the FSI Team
Oct 4, 2023 9:15 AM EDT

Is this becoming a 'single issue' market singularly focused on yields? That will eventually change, but the turning point seems a bit away.

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

  • 12:13 PM EDT BRUCE KAMICH

    8 Trading Rules from T. T. Hoyne

    You just read the header for this missive and prob...
  • 08:42 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    How Elite Traders Make Big Profits
  • 02:58 PM EDT BRUCE KAMICH

    Classic Trading Rules From Bernard Baruch

    Bernard Baruch listed the rules (below) in his aut...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 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