We looked at Workday (WDAY) on Monday and wrote ahead of company earnings that "the charts suggest that we might see a recovery rally of sorts in the next few weeks. Investors should be patient and wait for a base pattern to form, maybe from lower levels."
Let's check on the charts again, following the company's earnings report later that Monday and the co-CEO's appearance on "Mad Money" later that night.
Co-CEO Aneel Bhusri told "Mad Money" that throughout the pandemic companies have been focused on their workers and that that's made Workday's software, which can assess the engagement of employees, valuable for customers.
But Workday shares are off for the year, despite the company posting strong earnings and accelerating revenue growth.
Let's check the charts.
In this daily bar chart of WDAY, below, we can see that prices gapped higher Tuesday and rallied to test the declining 50-day moving average line. Prices have so far stopped short of the underside of the 200-day line. Trading volume is better than average but prices are not at the highs of the day suggesting that there is some profit-taking going on. The On-Balance-Volume (OBV) line is pointed up, but it may not break its November high. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the upside for a cover-shorts buy signal.
In this daily Point and Figure chart of WDAY, below, we can see a potential upside price target of $331 but a trade at $260 is really needed to strengthen the chart.
In this weekly Point and Figure chart of WDAY, below, we can see a potential downside price target in the $205 area.
Bottom line strategy: If you bought WDAY ahead of earnings on Monday, I would recommend taking the money and running. Take the quick gains and wait for a better buying opportunity when the broad market averages are strong.