Bottom may be in on cyber stocks. Here are fundamental and technical reasons
Cybersecurity stocks were soaring Wednesday — for both fundamental and technical reasons — following a rough performance in the final weeks of 2025. The big question: Is the bottom in? Shares of Club names CrowdStrike and Palo Alto Networks were each up roughly 5% in the third session of an early 2026 rally. Despite the late-year downturn, both companies are cyber leaders with comprehensive platform strategies. They provide one-stop shops for better protection at a better value versus the alternative of more fragmented solutions from competitors. Fundamentally, we view cybersecurity as a secular trend, believing that demand will only go up over time as bad actors become more sophisticated through the proliferation of artificial intelligence and the stakes increase as the world becomes increasingly more connected, with data more valuable than ever. In the near term, demand could see an uptick as Russia and China – both known state sponsors of cyber-attacks – expressed their displeasure over the U.S. operation in Venezuela over the weekend. During our Morning Meeting, Jim Cramer recommended CrowdStrike as a buy — but maybe not right away, since it is not our style to chase 5%-plus moves. Wednesday’s rally could very well herald a bottom. Jim’s views are supported by technical analyses of one-year charts of both CrowdStrike and Palo Alto Networks, which show that the support seen in Wednesday’s gains signals a resumption of an uptrend (represented by the straight pink line) that started shortly after an April 2025 selloff in response to President Donald Trump ‘s “reciprocal tariff” announcement. Both stocks have our buy-equivalent 1 rating . Of the two, CrowdStrike may have the better setup for buyers. While both stocks have now reclaimed their 200-day moving average levels (yellow line), which we will now look to for support, CrowdStrike has more room to run before it comes up against its 50-day moving average (red line), the next key resistance. CrowdStrike has about 5% of upside before we get there. Palo Alto Networks is currently bumping up against its 50-day moving average. We must see Palo Alto get over this resistance level in the next day or so before we can call this former 50-day moving average support. In addition to the uptrend holding thanks to Wednesday’s move, the MACD, a technical tool used by market technicians to help determine changes in momentum or direction, may also be indicating that we are looking at a bottom in the making. MACD (seen at the bottom of the charts) stands for moving average convergence divergence. It tracks several exponential moving averages, in hopes of revealing information about future momentum/direction. (Jim Cramer’s Charitable Trust is long CRWD, PANW. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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