Short Trade Idea
Enter your short position between $188.50 (the intra-day low of its last bearish candlestick) and 193.66 (Friday’s intra-day high).
Market Index Analysis
- Palo Alto Networks (PANW) is a member of the NASDAQ 100 and the S&P 500.
- Both indices trade inside bearish chart patterns with mounting downside pressure.
- The Bull Bear Power Indicator of the NASDAQ 100 turned bearish with a descending trendline.
Market Sentiment Analysis
Equity futures are rising this morning, following the AI selloff that prompted a rotation out of the sector last week. Markets await the delayed release of October’s non-farm payroll and retail sales data tomorrow, while the CPI report will follow on Thursday. China’s factory output and retail sales have weakened drastically in November, adding to global economic woes. Analysts have grown more bullish on 2026, fueled by hopes for a dovish Fed, which could increase monetary stimulus and drive tech shares higher, while ignoring inflationary concerns and high debt levels.
Palo Alto Networks Fundamental Analysis
Palo Alto Networks is a cybersecurity company that offers advanced firewalls and cloud-based products, serving over 70,000 organizations across 150 countries, including 85 of the Fortune 100. It also houses the Unit 42 threat research team.
So, why am I bearish on PANW following its earnings release?
PANW reported revenues of $2.47 billion, just a notch above expectations of $2.46 billion, and earnings per share of $0.93, beating forecasts of $0.89. I am bearish on its valuations, much higher-than-expected capital expenditures in its latest quarter, $84.0 million versus $59.1 million expected, and a conservative outlook that does not support current valuations. The impact of its recent acquisitions, Chronosphere for $3.35 billion and CyberArk for $25 billion, will take time to clarify.
Palo Alto Networks Fundamental Analysis Snapshot
The price-to-earning (P/E) ratio of $122.10 makes PANW an expensive stock. By comparison, the P/E ratio for the NASDAQ 100 is 34.13.
The average analyst price target for PANW is $224.53. It suggests good upside potential, but downside risks dominate.
Palo Alto Networks Technical Analysis
Today’s PANW Signal
Palo Alto Networks Price Chart
- The PANW D1 chart shows price action inside a bearish price channel.
- It also shows price action breaking down below its Fibonacci Retracement Fan.
- The Bull Bear Power Indicator is bearish with a descending trendline.
- The average bearish trading volumes are higher than the average bullish trading volumes.
- PANW corrected with the NASDAQ 100, a bearish confirmation.
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My Call Palo Alto Networks
I am taking a short position in PANW between $188.50 and $193.66. Current valuations neither align with economic reality nor are supported by operational metrics. I am wary of the current spending spree, while the cautious outlook adds to medium-term concerns.
- PANW Entry Level: Between $188.50 and $193.66
- PANW Take Profit: Between $144.15 and $150.12
- PANW Stop Loss: Between $207.19 and $211.99
- Risk/Reward Ratio: 2.37
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