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Palo Alto Networks Inc (PANW) - February 22, 2024

Cybersecurity company Palo Alto Networks, Inc. (PANW) had been on a roll heading into its recent earnings report. The shares had been climbing up the rankings in the SIA NASDAQ 100 Index Report since August and had been in the Green Favored Zone since September. At the close on Tuesday, the shares were up 49.2% since entering the green zone while the NASDAQ Composite Index was up 13.7% over the same period.

And then KABOOM!!! Even though PANW beat the street on earnings, investors didn’t like the guidance and went running for the exits. The shares plunged 28.4% in one day and fell 68 spots to 74th place, dropping out of the green zone, through the yellow zone and down into the Red Unfavored Zone, all in one day.

Candlestick Chart Reinforces the Plunge:

The candlestick chart for Palo Alto Networks (PANW) really shows just how big yesterday’s plunge was. A massive breakaway gap downward snapped multiple trend and support lines, wiped out all gains made since December and took the shares back to levels last seen in November. This occurred on a big spike in volume, indicating a decisive bearish turn in sentiment.

Next potential support may appear near $250.00 where a round number and a support line converge, followed by the September low near $225.00 and the August low near $210.00. Initial resistance on a bounce appears near $280.00, the lowest breakdown point, then the $300.00 round number.

Point and Figure Chart Shows a Big Dive:

Palo Alto Networks (PANW) shares had been under steady accumulation for over a year and trading at new all-time highs heading into Tuesday evening’s earning report. Yesterday’s price collapse did a lot of damage, erasing all the gains the shares had made year to date, and more. PANW completed a bearish Double Bottom breakdown signaling the start of a new downtrend.

The shares have pulled back to test a potential support zone between $251.50 and $261.70 where previous resistance levels and breakout points cluster. Should that fail prior lows suggest potential support near $227.80 or $206.35 on trend. Initial resistance on a bounce appears near $288.95 based on a 3-box reversal.

With its SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) dropping to a bearish 5 out of 10, PANW is exhibiting short-term weakness against the asset classes.

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