Don't Ignore This Chart!

Palo Alto Networks Breaks from the Pack


Most stocks have struggled since November, but Palo Alto Networks managed to reverse at a key area and break above a resistance zone.

The chart below shows PANW with weekly bars over the last 3 years. The stock broke to new highs in February 2018 and more than doubled from spring 2017 to autumn 2018. Notice how the stock recorded numerous 52-week highs from January to August 2018. Stocks recording 52-week highs are leading the market and attracting attention. The gray lines show the 52-week price channel to mark the 52-week high-low range.

The blue zone marks a reversal area using broken resistance and the Fibonacci Retracements Tool. Even though the stock fell hard from October to December, it did not record a 52-week low and found support near broken resistance (blue zone). Also notice that the decline retraced 50-61.8% of the prior advance. This is a classic setup that chartists should keep in mind for future reference (return to breakout and 50-61.8% retracement).

PANW is showing leadership here in 2019 as it breaks above its November-December highs. In contrast, the lower window shows SPY trading well below these highs. The price breakout shows absolute strength and the comparison with SPY shows relative strength. Despite a questionable environment for the broader market, this is a powerful combination that could foreshadow new highs in the coming months.  

On Trend on YouTube

Separating the Signal from the Noise

  • Big Breakdown vs Zweig Thrust vs Resistance
  • Overbought Indicators and Waning Breadth
  • Watching the Windups (XLK, XLV, XLC, GLD)
  • Pullback for Treasuries and Surge in Junk
  • Comparing the Bounce using Stochastics
  • Stocks to Watch (KR, RMD, SBUX, TWLO)
  • Click here to Watch

- Arthur Hill, CMT

Senior Technical Analyst,

Book: Define the Trend and Trade the Trend
Twitter: Follow @ArthurHill

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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