Short-Squeeze Setting up in CYBR?

short squeeze

Short-Squeeze: a Quick Definition

A short-squeeze occurs when the opinion of a stock reverses quickly to the up side.

Generally speaking there is apathy or a moderate down trend. An unexpected catalyst violently moves the price higher and does not retrace to allow short-sellers an opportunity to trade out of the position.

Astute buyers typically notice the explosion in price and volume and add new fuel to the rally.

At this point there are now two buyers involved: short-sellers who need to exit and new buyers. If this demand is in sync with volume the moves higher in price can be swift.

Today’s swing trading lesson combines fundamental scenarios with price action patterns.

Is a Short-Squeeze Rally Setting up in CYBR? (Cyberark Software Ltd)

During the week before and after its February 12th earnings announcement, CYBR saw gains of 100%. While the cyber security industry continues to show tremendous growth, momentum in the stock waned, resulting in a 61% pullback into major support.

Now CYBR sits in a wedging formation, waiting for a catalyst, with earnings at least a month away.

On March 26th, the House Intelligence Committee passed the Protecting Cyber Networks Act, creating new legal authorizations for companies to share cybersecurity threat information with government agencies.

The bill makes the government liable for invasion of privacy and civil liberties by offering corporations protection from civil liberty lawsuits if they share private information with the government for the purpose of stopping cybersecurity attacks.

http://www.wired.com/2015/03/privacy-critics-go-0-2-congress-cybersecurity-bills/

This is a very positive development for the cyber security space and a catalyst that could force short-seller to begin covering part of their $1.9 mill shares short. (~30% short float).  Any cyber-attack on the biggest companies (Target, Sony, Anthem, etc) or government would also provide a catalyst for higher prices.

CBYR has the potential for an explosive move back to $70, even $80 should the market co-operate

BULL CASE
  • Cyber Security has becoming top priority for companies and countries around the world
  • Recent cyber attacks on the biggest companies (Target, Sony, Anthem, etc)
  • Move to protect Big Data
  • Push for Security Automation
  • Tremendous growth last 3 years (see chart)
cybr
Minimal exposure to Cap Ex reduction in Energy space (see exhibit)
cybr
Increases in free cash flow
No Debt, $177mln in cash
BEAR CASE
  • Increasing competition from larger players
  • Foreign Currency risk, 41

CYBR Daily Chart

cybr chart

CYBR 60 Minute Chart

cybr 60 minute chart

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