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Here's What's Troubling About Qualys Stock

Keep an eye on the pullback from December into January.
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Qualys (QLYS) is a cloud-based solution that "detects vulnerabilities on all networked assets". The technology of this cybersecurity firm is above my pay grade so let's check out the charts and indicators.

In this daily bar chart of QLYS, below, I see some clues to focus on more closely. Prices have rallied strongly since early May and have nearly doubled. Impressive. QLYS traded above the rising 50-day moving average line and the rising 200-day moving average line. The trading volume looks like it has increased in the past three months.

The daily On-Balance-Volume (OBV) line shows a steady rise the past year until December when it looks like it stalled. The pullback from December into January troubles me because it went lower without a bounce and trading volume was active instead of light.

The Moving Average Convergence Divergence (MACD) oscillator has corrected down to the zero line before turning to the upside - we may or may not see a bullish crossover.  

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In this weekly Japanese candlestick chart of QLYS, below, I can see that prices have recently pulled back after doubling in price. Prices are trading well above the rising 40-week moving average line. The weekly OBV line shows us a rise to confirm the price gains. The MACD oscillator is in a bullish alignment above the zero line but it has narrowed significantly telling us that the trend strength is weakening. 

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In this daily Point and Figure chart of QLYS, below, I can see a potential upside price target in the $217 area. A trade at $208 is needed to refresh the uptrend. 

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In this weekly Point and Figure chart of QLYS, below, I can see that prices reached and exceeded a price target in the $187 area. 

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Bottom line strategy: There are pullbacks in uptrends and there are pullbacks in uptrends. They sound the same but some pullbacks are corrections in an uptrend and other pullbacks can be the start of something more serious. The pullback from December into January, noted above, troubles me and tells me to be cautious in the days ahead.

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