Analysis: PANW FEYE

Shortly after the opening bell, we will be selling 50 shares of Palo Alto Networks (PANW) at a bid/ask of roughly $216.05/$220.10. Following the trade, PANW (325 shares) will represent 2.72% of the portfolio.

We will be trimming shares in Palo Alto Networks, locking in a sale price that will be our highest to date. PANW has been an absolute horse since the late 2018 market pullback, a time when we constantly defended the shares as it traded in the $164 to $178 range (see our Alerts here and here).

To put some perspective into how hard and how fast this stock has moved to the upside, the shares have rallied more than 30% since their November trough, turning this previous loss into a solid win for the portfolio. After this monster move higher, we think it is worthwhile to take a small amount off the table and realize a gain of roughly 3.7% with this trade off Wednesday night's close (it will be different come market open).

Also on our minds was the weak outlook provided by industry peer FireEye (FEYE) last night. This Bullpen name is not in the same class of quality as Palo Alto Networks, but, like most groups in the market, the cyber-security stocks like to trade in tandem with each other. Palo Alto is better, but the weakness from FEYE may apply some pressure in the coming trading sessions.

Lastly, this sale further adds to the war-chest of capital we have gradually built up in 2019. After we kept cash levels low in late 2018/early 2019 to maximize our gains in the market's snap-back rally, we have slowly lightened up on a few positions to regain flexibility and future optionality. As we have repeatedly said, we are itching to initiate a few new names from the Bullpen, but we never chase stocks and prefer to buy when the "merchandise" is on discount. Should the market wobble and come in, expect us to pounce on a few new opportunities.