Thinking about cybersecurity? Here are two to choose from: Fortinet ($FTNT) vs. CyberArk ($CYBR) (December 09, 2019)
FTNT CYBR
I want to talk about, not just one but two cybersecurity stocks today. First of all, Fortinet ( NASDAQ: FTNT ); this is a stock that IBD is giving you another buy point on this. The stock broke out, it is kind of hard to trade this because it broke out on earnings, right? The stock gaps up and keeps going, but believe it or not, another buy point is when or if the stock breaks out above here. It is an aggressive one because the stock has already run so much.
However, you have to think about it for a minute; if the stock has run all the way here from $80.00 up to $105.00 and it’s not pulling back that means that there is some real demand for the stock here. So you have got the “we cans” that are taking profits, shoot, if I owned it I’d be weak, I’d be taking profits happily, but the stock is still being propped up. Since this last low here last Tuesday it hasn’t been undercut. Each day the stock has held right around 103.00
So this is a stock that I think you definitely want to keep a price alert on at about 106.50, something like that. If the stock runs up there then you go ahead and buy that stock and then keep a fairly tight stop on it. Because after the stock has been extended this much, just think about it, the stock has been extended this much, breaks out to the upside, you buy it. You certainly don’t expect the stock to do this, that’s not what stocks do. On this kind of ceiling here you have to expect a stock, that once it breaks out it will continue to go. That enables you to buy the breakout and then keep a fairly snug stop so that you cut your risk.
But here’s another way to cut risk; color me crazy but I like CyberArk ( NASDAQ: CYBR ) a little bit better. It’s not the perfect setup. My buddy Mark Minervini would shake his head right now, but that’s okay, a guy’s gotta do what a guy’s gotta do. I like the way this thing is setting up, It has broken out of a volatility squeeze; the 50-day moving average is below the 200, which really isn’t what we want to see. But what we do want to see is this series of high, low, higher high, higher low, and now we get a little squeeze right here.
This is how I would trade this stock: If it pops up above 120.00 you’re in. You also keep a stop a little bit below 115.00, so that’s 5 percent, a little more than 5 percent risk on the downside. The software industry is really cooking; CyberArk ( NASDAQ: CYBR ) had a heck of a move down, this thing lost a third of its market cap and now it is rebuilding, it has drifted back to a solid buy point. It would be nice if it tightened up a bit more but beggars can’t be choosers and I guess in this case I am a beggar. So you are looking for this thing to pop up, keep a tight stop here and there’s your trade.
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