Zscaler ($ZS) is a great company with strong fundamentals. Here’s why I’m not buying the stock. (August 15, 2019)

ZS SP-500 ZS 

In a market like this ( INDEXSP: .INX ) where we are just kind of weak; we didn’t get much of a bounce today, didn’t really expect one, the market is really heavy. I suspect that ultimately we go lower but I don’t really know, nobody else does either just a lot of people won’t admit it, I do. I don’t know which way the market is going but it looks pretty weak.

With that kind of as a backdrop I want to tell you why you should not be buying Zscaler ( NASDAQ: ZS ) here, and I like this company, I do. I like the company; it is kind of like they are the middle man in the cloud, but the market is weak. This stock has hit, printed a lower high here, relative to this last one here, it still hasn’t printed a lower low; because this is the low that you kind of use as the basis for your zigzags, from there to there and then this. What we are waiting for is a move down to here and then we could declare, okay, this was the lower high and this is the lower low but right now we are not there.

We’ve got a high, a low, and then what is likely to be a lower high. Now we are just kind of waiting for a lower low. We don’t know whether that is going to happen and that’s my point. We are kind of in no man’s land but this stock, over the last couple of days, has traded below the 50-day moving average. Yesterday, on heavier than average volume, though it did regain the 50-day moving average, this morning it gapped up a little bit but then sold off. It kind of sold off, it kind of sold off kind off fairly significantly, it was first thing in the morning, the stock never ever recovered.

At this point I will say it again, I like this company and I would like to own the stock. I had a couple of good trades on it earlier; I first got into this stock here but then I have kind of bought and sold it along the way. I kind of wished I had just kept it all, all the way up here, but I didn’t. I made good money on the stock and now I just need to let this thing settle in.

This is one of those markets where it pays to watch good stocks and wait for the setups as opposed to buy good stocks and hope that setups happen. That’s just what I think about here. So this Chart of the Day is not a, hey, buy this right here right now. It’s not. It’s hey, here’s my analysis on a stock of a company that I really like and I just don’t think it’s right to buy right here.

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