Before we begin, just a note to mention that TLT took out the fast MA featured in the October 10th daily, while SPY underperformed. If that is a trend, it behooves you to review that daily.

Loyal readers of the Daily know that we often focus on zooming out to longer timeframes to assess bigger trends. Clearly, the 80-month moving average in small caps and retail has become an important support “line in the sand” to measure the potential for recession and/or stagflation. In the case of the chart of USO (US Oil Reserves), the 80-month moving average is a line in the sand to measure the inflation narrative or higher oil prices likely coming.

Historically, the 80-month moving average (green line) served as resistance in USO since 2008 when the market crashed. Then, from March 2022 until July 2022, USO traded above the 80-month MA. However, that was short-lived thanks to rising interest rates.

3 months ago, that changed. Once oil cleared $80 a barrel, we saw the price spike to about $94.00. USO then cleared the 80-month MA in August on the heels of OPEC+ and the US dwindling oil reserves, plus higher-than-expected demand. The oil market appears to have priced in current interest rate values.

Although the current geopolitical situation is not a pure impact on oil prices, what the chart suggests is that lack of impact can reverse to a much larger impact. The USO price closed the month of September at 76.00. This month, USO opened higher. Currently, the price is above the 80-month, but slightly below a pivotal point at 76.00.

Quite simply, a move over 76 suggests higher prices with a good risk point to under 73 or the 80-month MA. That would correspond with oil holding $80 per barrel and returning above $86.00. More importantly, if the trend is your friend, this break higher of the 6-7 year business cycle, if it sustains, should drive oil prices to the next target of around $110.

Please join Geoff Bysshe on Wednesday October 11th at 8 PM ET as he reveals the 3 most important principles behind the success I have enjoyed as a veteran trader.

Tired of looking for shortcuts to trading that only lead to fleeting success? This webinar is for you!

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If you find it difficult to execute the MarketGauge strategies or would like to explore how we can do it for you, please email Ben Scheibe at Benny@MGAMLLC.com.

“I grew my money tree and so can you!” – Mish Schneider

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Follow Mish on Twitter @marketminute for stock picks and more. Follow Mish on Instagram (mishschneider) for daily morning videos. To see updated media clips, click here.

Mish in the Media

In this video from CMC Markets, Mish shares her short-term forecast for USD/JPY and popular commodity instruments ahead of the US PPI announcement and September’s Fed meeting minutes, with recent dovish comments from Fed officials suggesting a potential shift in the committee’s policies.

Mish joins Business First AM to discuss the market reaction to the war in Gaza in this video.

Mish discusses what’s needed for a market bottom on the Financial Sense Newshour podcast with Jim Puplava.

Mish takes over as guest host for David Keller, CMT on the Monday, October 9 edition of StockCharts TV’s The Final Bar, where she shares her thoughts in the daily Market Recap during a day of uncertain news.

To quote Al Mendez, “The smartest woman in Business Analysis @marketminute [Mish] impresses Charles with her “deep dive” to interpret the present Market direction.” See Mish’s appearance on Fox Business’ Making Money with Charles Payne here!

Mish covers bonds, small caps, transports and commodities-dues for the next moves in this video from Yahoo! Finance.

In this video from Real Vision, Mish joins Maggie Lake to share what her framework suggests about junk bonds and investment-grade bonds, what she’s watching in commodity markets, and how to structure a portfolio to navigate both bull and bear markets.

Mish was interviewed by Kitco News for the article “This Could Be the Last Gasp of the Bond Market Selloff, Which Will be Bullish for Gold Prices”, available to read here.

Mish presents a warning in this appearance on BNN Bloomberg’s Opening Bell — before loading up seasonality trades or growth stocks, watch the “inside” sectors of the US economy.

Watch Mish and Nicole Petallides discuss how pros and cons working in tandem, plus why commodities are still a thing, in this video from Schwab.

Coming Up:

October 11: CNBC Asia

October 12: Dale Pinkert, F.A.C.E.

October 27: Live in-studio with Charles Payne, Fox Business

October 29-31: The Money Show

Weekly: Business First AM, CMC Markets

ETF Summary

S&P 500 (SPY): 435 resistance.Russell 2000 (IWM): 177 resistance.Dow (DIA): 338 resistance.Nasdaq (QQQ): 368 pivotal.Regional banks (KRE): 39.80-42.00 range.Semiconductors (SMH): 150 resistance, 143 support.Transportation (IYT): 237 resistance, 225 support.Biotechnology (IBB): 120-125 range.Retail (XRT): 57 key support; if can climb over 61, bullish.

Mish Schneider

MarketGauge.com

Director of Trading Research and Education

In this edition of StockCharts TV‘s The Final Bar, guest Adam Turnquist, CMT of LPL Financial shares his chart of the Ten Year Treasury Yield and explains why the US Dollar may be the most important chart to watch as earnings season begins. Dave highlights stocks making new swing highs, particularly in the Industrial and Technology sectors.

This video originally premiered on October 11, 2023. Watch on our dedicated Final Bar page on StockCharts TV, or click this link to watch on YouTube.

New episodes of The Final Bar premiere every weekday afternoon LIVE at 4pm ET. You can view all previously recorded episodes at this link.

SPX Monitoring Purposes: Long SPX 9/28/23 at 4299.70.

Gain since 12/20/22: 15.93%.

Monitoring purposes GOLD:  Long GDX on 10/9/20 at 40.78.

Above is the monthly SPX. The pattern forming appears to be a head-and-shoulders bottom where the head is last October’s low and the right shoulder is forming now. To confirm this pattern, a sign of strength (large volume and strong price movement) will be needed through the neckline (near 4600 SPX). If this pattern is confirmed, it has a measured target near 5700 SPX, which is 30% higher from current levels. The time it may take to reach this lofty level would be a year or longer. Seems far fetched, at the moment but the groundwork is present; we will need the sign of strength through 4600 to increase the likelihood.

Yesterday we said, “The bottom window is the NYSE Advancing issues/NYSE Total issues with a 10-period average.  A Zweig Breadth Thrust occurs when this indicator drops below .40, then rallies to .60 within 10 days. We pointed out the previous Zweig Breadth Thrust in the past with blue dotted arrows. There were three Zweig thrusts in the basing period from April 2022 to April 2023. When a Zweig thrust occurs, it suggests a bullish intermediate-term rally is coming. The 10-day count down starts from last Thursday, when the Zweig thrust closed at .40. The 10-day count down to .60 would be October 19 or sooner. The current reading is .49, and we’re almost halfway there. The current rally would need to continue to push the Zweig thrust higher. I’m thinking it’s possible.” The current reading now is .54 (over halfway there) and still have until next Thursday for .60 to be reached.

Tim Ord,

Editor

www.ord-oracle.com. Book release “The Secret Science of Price and Volume” by Timothy Ord, buy at www.Amazon.com.

Signals are provided as general information only and are not investment recommendations. You are responsible for your own investment decisions. Past performance does not guarantee future performance. Opinions are based on historical research and data believed reliable; there is no guarantee results will be profitable. Not responsible for errors or omissions. I may invest in the vehicles mentioned above.

Cybersecurity companies occupy a unique space. It can never end or stand still. It can only escalate and transform. And given the increase in spyware attacks, the necessity for cybersecurity will increase.

So, if you’re wondering whether there’s “growth” in the cybersecurity industry, well, yes. Let’s look at the industry using the First Trust NASDAQ Cybersecurity ETF (CIBR) as a proxy.

CHART 1: YTD COMPARISON BETWEEN CIBR ADN S&P 500 INDEX. More recently, cybersecurity stocks have outperformed the S&P 500.Chart source: StockCharts.com. For educational purposes.

Looking back year-to-date, CIBR and the S&P 500 index’s performance have always intertwined. But in the last two months leading to the Q3 earnings season, cybersecurity stocks are leading the S&P 500 index ($SPX) by a much wider margin. Let’s take a closer look at CIBR.

CIBR: Bullish Bounce Amid Stalling Momentum

CHART 2: DAILY CHART OF CIBR ETF. Look for CIBR to break out above the $47.50 level.Chart source: StockCharts.com. For educational purposes.

As noted in the article Which Cyber Security ETF is the Strongest?, you can see the signs of strength in CIBR. The most recent swing low is above its August low and 200-day simple moving average (SMA). But there isn’t much of an uptrend thesis until CIBR breaks above resistance at the two equal highs at $47.50. And if you look at price in relation to the kumo (Ichimoku cloud), it’s trading right into it, signaling a period of market indecision. You can also see a significant drop in buying pressure, as shown by the Chaikin Money Flow.

So, cybersecurity stocks may have been outperforming the S&P 500 over the last few months, but their collective momentum has largely stalled. Other factors are weighing into this stall, a big one being the surge in 10-year US Treasury yields ($TNX). But we’re also approaching Q3 earnings season. And for the biggest of these cybersecurity companies, it may be a make-or-break moment. Let’s dive into four of the biggest cybersecurity companies (by market cap).

Palo Alto Networks (PANW): Trending but Troubled?

Palo Alto Networks is the largest cybersecurity stock by market cap (over $79 billion), yet the stock’s trading volume of just under 4 million on average is far below most popularly traded stocks. You can grab this information on StockCharts’ Symbol Summary, a useful tool for at-a-glance fundamentals and technicals. With a SCTR score of 94.9, it demands a look at PANW’s current momentum and trajectory.

CHART 3: DAILY CHART OF PANW. Palo Alto Network’s stock price is testing its highs. Will it break above this resistance level?Chart source: StockCharts.com. For educational purposes.

Like CIBR, PANW bounced well above its August lows and 200-day SMA. It found support at the kumo, which also shifted from bearish to bullish, projecting further bullish support 26 periods ahead. While PANW tests its three-month highs for the fourth time, divergence and negativity in the CMF suggest that buying pressure has dwindled, and momentum is waning. Of course, this can all change when PANW reports earnings on November 16. And it’s important to note that PANW has always delivered a positive earnings surprise since 2015.

The second-largest cybersecurity stock, with even greater average trading volume, is Fortinet (FTNT). While FTNT has similarly delivered strong earnings surprises since 2016, its technical scenario differs from PANW.

Fortinet (FTNT): Legit Plunge or Guidance Fakeout?

CHART 4: DAILY CHART OF FORTINET STOCK. The stock chart of FTNT shows weakness, but this could change when the company reports earnings in November.Chart source: StockCharts.com. For educational purposes.

On August 4, FTNT had its biggest one-day drop on record, falling 26%, after issuing a negative earnings forecast. This took its prices below the 200-day SMA, and its low above $56.00 has been tested four times, proving to serve as resilient support. Still, it has yet to break above the 200-day SMA support-turned-resistance, and the bearish kumo thickens. And its SCTR score of 25 adds further gloom to the technical picture. The CMF, however, shows a higher low against FTNT’s parallel lows (bullish divergence?). In short, FTNT’s November 2 earnings report is critical, and if it outperforms its issued guidance, then FTNT could surge.

Crowdstrike (CRWD): A Steady Uptrend

CHART 5: DAILY CHART OF CROWDSTRIKE STOCK. The stock price is an an uptrend. Keep an eye on near-term resistance levels.Chart source: StockCharts.com. For educational purposes.

The third-largest cybersecurity stock by market cap is Crowdstrike (CRWD). In contrast to the previous two stocks, CRWD has been on a steady uptrend since the beginning of the year. Breaking above its September high, it exemplifies an “uptrend” in its most standard definition: a series of higher highs and higher lows. Its SCTR score of 97 places it well above PANW. CRWD is slated to report on November 28, and like its industry competitors, CRWD has a history of positive earnings surprises.

Last on this list is the fourth biggest cybersecurity stock by market cap: Zscaler (ZS)

ZScaler (ZS): A Highwire Outperformance?

CHART 6: DAILY CHART OF ZSCALER. The stock has broken above a broadening top formation. Does this mean the stock will pull back or continue to move higher?Chart source: StockCharts.com. For educational purposes.

ZS saw a dramatic jump on May 6 due to a Barclays analyst upgrade. From June up until a few days ago, ZS has been forming a long Broadening Top before breaking out to the upside. To splash a little sobriety on its bullish surge, broadening tops have a 67% rate of pulling back. But there’s also a rising and thickening bullish kumo, which suggests a range of potential support. With a 98.4 SCTR score, ZS leads all four stocks on positive technical ranking. And like the other four stocks discussed, ZS, too, has a history of outperforming on the earnings front. The company is slated to report on December 7.

The Bottom Line

The cybersecurity world isn’t just about dodging digital bullets; it’s about innovation and market performance. While CIBR gives a glimpse of the industry’s potential, big players like PANW, FTNT, CRWD, and ZS show an interplay of technicals and fundamentals behind the proverbial firewall of valuations. As the necessity of cybersecurity grows, so do the stocks. And if you’re not watching this space, it’s time you did.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.