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Here’s How Far Palo Alto Networks Stock Can Rally on Earnings

Palo Alto Networks is surging to all-time highs after reporting earnings. Here's how far the stock could rally now.

Shares of Palo Alto Networks  (PANW) - Get Free Report sure are enjoying the day, up 17.7% and hitting all-time highs on Tuesday.

The rally comes after the company reported better-than-expected fiscal fourth-quarter results after the close of trading Monday.

Palo Alto Networks reported in-line earnings per share and beat revenue expectations as sales climbed more than 28% year over year. However, strong guidance also gave bulls some confidence.

A growing wave of cyberattacks and security threats continues to drive Palo Alto Network’s business higher. It’s also paving the way for long-term secular growth.

Just last week, T-Mobile  (TMUS) - Get Free Report experienced a large data breach that could involve more than 100 million customers.

Still, some may be surprised by the stock’s massive post-earnings move on Tuesday. So just how high can it go?

Trading Palo Alto Networks Stock

Daily chart of Palo Alto Networks stock.

Daily chart of Palo Alto Networks stock.

When looking at a chart of Palo Alto Networks, the bulls have to be pretty happy. While the stock has been consolidating for a while, we have seen the transition from bumpy growth stock to a more stable tech stalwart.

The stock did suffer a 22% peak-to-trough decline in the first quarter, as growth stocks were hammered. However, it avoided making new lows in May when the rest of the group was breaking to new lows.

Further, Palo Alto Networks stock never broke below its 200-day moving average.

Now springing to new all-time highs, I have the $455 to $460 area on my radar.

Near the bottom of that range is the 261.8% extension of the massive 2020 first quarter range (the COVID selloff) and near the top of the range is the 161.8% extension of the current range (which is pictured on the chart above).

In essence, this should be an area of interest for active traders should the stock continue to forge its way higher in the coming days.

In time, a move above $460 opens the door up toward $500.

On the downside, traders have to keep the $400 area on watch. This was resistance in February and again in July and August. A dip to this level that finds support seems like a rather attractive buying opportunity at this moment.

Along with that, I will be watching for dips to the 10-day moving average as a possible post-earnings dip-buying opportunity.