Security software provider Palo Alto Networks, Inc. reported solid fiscal first quarter results on Monday evening, beating EPS and revenue estimates while raising second quarter and full-year guidance. The stock shot higher at the start of Tuesday’s session, gaining nearly 10% before a mid-day swoon cut deeply into early gains. Even so, it closed at a four-week high, good enough to raise hopes for additional upside into year end.
However, a convoluted two-year price structure littered with multiple unfilled gaps predicts high volatility well into 2018, with bulls and bears so evenly divided that neither has generated a sustained trend since the July 2015 top at $200. An 89 million-share float with more than 86% locked up by institutions and insiders practically ensures wide bid/ask spreads and brutal price swings generated by predatory algorithms feeding on at-home gamers flipping the remaining 14%.
The $165 level marks the place to watch in this whirlwind, following four failed attempts to mount resistance since it broke in January 2016. The 200-day exponential moving average (EMA), currently rising through $137, presents a second inflection point because it has triggered multiple 2017 reversals. The most reliable positioning while we wait for those levels to be hit will be to sell strength and buy weakness, taking advantage of the two-sided tape while hitting the sidelines with quick exits. (See also: Palo Alto Networks Stock Could Rally Above $160.)
Palo Alto Networks price action reflects equal strength between bulls and bears, frustrating trend followers with a multi-year standoff. …read more
Read more here: Palo Alto Networks Upside Limited Despite Solid Quarter