Shares of Palo Alto Networks (PANW) are trading higher by about 8% after the company reported earnings.
Palo Alto Networks delivered an earnings and revenue beat, while its full-year earnings outlook topped analysts’ expectations.
The cybersecurity firm continues to generate strong business. Despite a bear market and looming recession, cybersecurity trends remain strong.
It’s very clear that the business is quite strong, not just for Palo Alto, but for many cybersecurity companies. So why aren’t these stocks — like CrowdStrike (CRWD) and Fortinet (FTNT) — hitting new highs?
Despite strong earnings and guidance, growth and tech stocks remain mired in a bear market. The group’s typically high valuation doesn’t seem to help matters.
Clearly, the fundamentals are working in its favor, so let’s look at the chart for Palo Alto Networks stock to discern any clues about the stock’s direction.
Trading Palo Alto Networks Stock on Earnings
Chart courtesy of TrendSpider.com
While we’re seeing a bullish reaction to earnings so far, Palo Alto Networks is fading a bit from today’s high. If buyers step back in over the next few hours or days, the stock will face a much larger hurdle.
That’s as it comes into the $175 area.
When looking at the daily chart above, there are a lot of measures that come into play near that mark.
They include downtrend resistance (blue line), the 50-week and 200-day moving averages, and the 50% retracement.
So far all of these measures have been resistant, including in September and in October. If Palo Alto Networks stock can clear all of these marks, it’s a huge achievement for the bulls.
Further, it would open the door up to the $185 to $187.25 area where the stock would find its 61.8% retracement and the gap-fill at $187.27.
Should the stock continue to fade — or if it runs into resistance and cannot push higher — look for support in the mid-$160s. There Palo Alto Networks stock will find its 50-day moving average and, in a few days, likely find its 10-day moving average as well.
Below both of these measures and the gap-fill down at $157.50 is in play.
The bottom line: For now, bulls have control, but they have a big hurdle coming up near $175. How Palo Alto Networks stock handles that mark will say a lot about it.
