Want to know what a “Shot Across the Bow” is? Here are several on Okta ($OKTA) (August 29, 2019)
Today I want to look at Okta ( NASDAQ: OKTA ). This company’s sales are really growing nicely, it is kind of accelerating sales. If you look at the quarterly earnings growth year over year, one quarter versus the same quarter the prior year, it’s like 58 percent, 50 percent, 50 percent, 49 percent, these are monster sales growth numbers but they aren’t making any money, not yet anyway. This is a company that is definitely worth watching, shoot man, it was worth buying last year at $50.00, now it was up, 140.00 at one point.
We are looking at this stock and saying, “Alright, well let me find a good entry. Back here this looks pretty good to me.” By the way, when is this? This is the end of July, this is not today but I want to track this stock. The stock is in an uptrend and it rebounds along the 50-day moving average. Oops, one day it fell below on heavier than average volume but then it quickly recovered. So it is a little bit of a shot across the bow, where you say, “Woe, woe, woe, wait a minute, it’s not supposed to do that because it has been trending nicely. So I’ve got to watch out, maybe this is going to sell-off further.” And then the stock recovers and you say, “Alright, we’re good.”
Here’s another one, this is not good but, guess what happens? It goes up and so, oh okay great so we’re alright. By the way, I don’t own this stock, I have never traded it, just letting you know. A lot of folks could have got shaken out about here, right around here. They could have just gotten shaken out because they are to fixated too much on the 50-day moving average. I think the 50-day moving average is an extremely important moving average, an extremely important indicator, but it’s not the only thing. It is not just positive whether a stock should be bought or sold, there is so much more to it than that.
The reason I’ve never really bought this is that it just never gave me the kind of setup that I like so I didn’t buy it. Now I just want to show you how this thing has been trading and hopefully, maybe you will learn a thing or two. It fell below the 50 and rebounded. Then really briefly this day, let’s just say, it tested it and rebounded and then the following day it definitely fell. And then it didn’t rebound right away. In fact, it traded for 4 days below the 50-day moving average. Then before finally climbing up, it’s on a little bit heavier than average volume here so it’s all good.
So far all we are seeing is this sideways congestion between 140.00 and 125.00. Note, there is no breakout here of 140.00. Now we are on 8/23, 8/26, 8/27, 8/28, that’s yesterday, and we are back below the 50-day moving average and we are testing this level here. In fact, yesterday this stock went as low as 121.34, which was well below these prior thrusts. So this is a stock now that is under massive distribution; earnings issues, a big massive sell-off to the downside and then that’s where this sits. I said the 28th and yesterday, I meant today, sorry about that. The point is, this has so many shots across the bow here, where it has pulled back to below the 50-day moving average and then it has kind of struggled to get above it.
I think you want to stay away from this stock. If I was long this stock right now I would just sell it and I wouldn’t sell it, keep this in mind, I wouldn’t sell it because I think the stock is about to do this, it might. I would sell it because I don’t think the stock is about to do that. And if I don’t think the stock is about to do that then the only option left is this, and I just don’t want to own a stock that is so far above the 200-day moving average when the market is up at the high part of its range, I don’t want to own a stock that is not looking like it is going to pay me off pretty quickly. That is why I would just say with Okta ( NASDAQ: OKTA ), I would just kind of stay away from it and see if it sets or try to find something else.