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CrowdStrike Hits New Highs on Earnings

It’s a good day for CrowdStrike bulls, with the cybersecurity specialist’s shares up 15% to new highs.



CrowdStrike Hits New Highs on Earnings - Where From Here?


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CrowdStrike Hits New Highs on Earnings – Where From Here?

The move comes after better-than-expected earnings and amid a somewhat busy earnings week.

The Sunnyvale, Calif., company’s shares dipped a bit on Tuesday and Wednesday, falling roughly 3.8% in both sessions. The move came after a pandemic favorite — Zoom Video — beat on earnings but saw a punishing post-earnings decline.

CrowdStrike is not necessarily an outright play on the coronavirus, but it does benefit from the increasing demand for cybersecurity.

To get such a solid rally on the day, CrowdStrike delivered better-than-expected earnings along with a revenue beat, as sales grew 86% year over year. Even better, management provided an upbeat outlook for the fourth quarter and full year.

The stock is now receiving price-target boosts from the analyst community.

Now traders want to know just how high CrowdStrike can rally. Let’s look at the chart.

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When the rest of the tech sector was surging into September, so too was CrowdStrike. The stock burst up toward $155 before sharply reversing.

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While “blow-off tops” can be tough to manage, we saw some encouraging price action follow.

Specifically, the stock quickly pulled back over the next few days – although that pullback was greeted by support near $118, which had been resistance.

When former resistance turns to current support, it is very bullish for the stock.

In October, $155 again acted as resistance, while later in the month and again in November, the $118-to-$120 area supported CrowdStrike stock.

What we want to see now is $155 act as support, should the stock dip from its post-earnings rally. In a sense, we already saw that, with Thursday’s low of $155.54.

If that’s the case and $155 is indeed support, the setup for CrowdStrike looks bullish as we head into year-end.

On the upside, I want to see whether the shares can get to the two-times range extension, near $172. Above that opens the door to a possible longer-term target of $200, with the 261.8% extension up near $215.

On the downside, the bulls really need to see the $155 level hold as support. Below $155 and the 10-day moving average puts the 50-day moving average on the table.

This article was originally published by TheStreet.

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