A Cyberattack with Something Behind It

It seems rather easy to cavalierly dismiss the knee-jerk rallies in cybersecurity stocks this morning. After all, news of an unprecedented global “ransomware” attack that hit at least 100,000 organizations in 150 countries, and continues to spread, is all over the headlines. 

Moreover, plenty of longs have been crushed in some of the previously-chic, high beta cybersecurity plays, such as FEYE, in recent years as the HACK (ETF for cybersecurity stocks) disappointingly lagged the broad market's bull. 

Thus, recency bias may certainly be in play here, as those previous longs who likely already capitulated would now expect this rally in the likes of FEYE to fizzle out quickly after this news-related pop abates. 

But the recency bias also ignores the much-improved price action in the HACK plays as a group. Even with CYBR and PANW suffering blowup-esque gaps down after earnings in recent months, the group has still made technical progress higher as a unit. 

As an example, consider the HACK ETF itself, below on the daily chart. Price has been properly consolidating above all major moving averages which are now rising. 

News headlines or not, this chart now shows us the essence of an intermediate-term uptrend. And this morning's gap higher, while on news, still serves to reinforce the bull technical thesis.

Indeed, not all news-related rallies are created equal. However, this HACK move certainly seems to have something behind it beyond mere knee-jerk hope. Underneath the surface, we are looking at a few quality charts in this space for Members.