FTNT Rolling LowerFortinet is a big player in cybersecurity with strong revenue growth and rapidly growing demand for its services. In the very Long-term, Fortinet should do well.
However, FTNT's technicals are signaling weakness on a more medium-term basis. The last year of FTNT price action has led to a rounded top formation. One could also argue that Fortinet shows signs of a head and shoulders pattern during the aforementioned period. Fortinet as of the past 7 months is now trading in a downward channel. The recent low recorded last week of 47.5 helps to confirm the continuation of bearishness in future trading. MACD on monthly/weekly/daily all are signaling further pain. The Weekly MACD is especially bearish, currently residing at its most negative level in FTNT's history.
Global market conditions are poor, and seemingly getting worse. Unfortunately, history has taught us that during periods of slowed economic activity amid monetary tightening great companies often sell off alongside their less successful peers (although not to the same degree).
To conclude: FTNT is experiencing a troubling technical outlook combined with a slowing economy/beaten-down consumer, I do not believe FTNT will be able to stay at such a high valuation with a p/e of 60, despite continued high demand. In the near term, I am looking for a move to 44.3 where the 50% fib retracement level sits. Looking further out, I expect a move down to the 30.2-27.1 range which has been an area of previous strong support as well as a 78.6% fib level. From there a rebound or consolidation period for Fortinet is likely.
As always this is not financial advice. Good luck!
