Short Trade Idea
Enter your Short position between $659.55 (an intermediate horizontal support level) and $696.74 (Friday’s opening price).
Market Index Analysis
CrowdStrike (NASDAQ:CRWD) is a member of the NASDAQ 100 Index and the S&P 500 Index.
Both indices experienced a massive one-day sell-off amid surging bearish trading volumes.
The Bull Bear Power Indicator for the NASDAQ 100 Index turned bearish with a descending trendline.
Market Sentiment Analysis
Equity futures are mixed this morning following Friday’s massive AI-led sell-off, mixed with a moderate repricing towards an interest rate hike this year to combat inflation, as the US Fed is behind the curve while the labor market remains healthy. Renewed fighting in the Middle East keeps upward pressure on oil prices, which are slowly moving towards the $100 barrel mark again. Earnings from Oracle and Adobe highlight this week, with all eyes on Friday’s blockbuster SpaceX IPO.
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CrowdStrike Fundamental Analysis
CrowdStrike is a cybersecurity company with a promising push into AI-based and cloud-based cybersecurity solutions.
So, why am I bearish on CRWD following its post-earnings breakdown?
CrowdStrike reported revenues of $1.39 billion and earnings per share of $1.10, slightly ahead of expectations calling for $1.36 billion and $1.07, respectively. The disappointment came from its forward guidance, which came in roughly as expected, missing the type of number the shares were priced leading up to last week’s earnings release. I am also bearish on the $138.4 million in insider selling, with competitive pressures accelerating and valuations remaining disconnected from underlying fundamentals.
Metric | Value | Verdict |
P/E Ratio | 765.02 | Bearish |
P/B Ratio | 32.80 | Bearish |
PEG Ratio | 5.46 | Bearish |
Current Ratio | 1.53 | Bearish |
ROIC-WACC Ratio | Negative | Bearish |
CrowdStrike Fundamental Analysis Snapshot
The price-to-earnings (P/E) ratio of 765.02 makes CRWD an expensive stock. By comparison, the P/E ratio for the NASDAQ 100 Index is 35.14.
The average analyst price target for CRWD is $707.47. This suggests moderate upside potential with high downside risks.
CrowdStrike Technical Analysis
Today’s CRWD Signal
CrowdStrike Price Chart
The CRWD D1 chart shows price action breaking down below its horizontal resistance zone.
It also shows price action between its ascending 0.0% and 38.2% Fibonacci Retracement Fan levels.
The Bull Bear Power Indicator is bullish with a descending trendline, approaching a bearish crossover.
The average bullish trading volumes are higher than the average bearish trading volumes, suggesting more short-term volatility potential.
CRWD corrected with the NASDAQ 100 Index, a bearish confirmation.
My CRWD Short Stock Trade
CRWD Entry Level: Between $659.55 and $696.74
CRWD Take Profit: Between $522.00 and $555.00
CRWD Stop Loss: Between $720.96 and $742.12
Risk/Reward Ratio: 2.24
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