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No. of Recommendations: 3
Quite a few years ago, David Gardner had recommended a stock and a few days later some event sent the price down a lot. It was a tech stock with a lot of employee stock compensation. He then recommended that Fools not buy the "dip" and to avoid the stock. I really can't remember if he made a sell rec. He talked about broken stocks at that time, its effect on employees and the length of time for the stock to maybe recover. Anyway, others have talked about stocks being broken whether or not the company was broken.

Also, with regard to stocks that have taken a big hit, we know the "3-day rule" for waiting to buy a large dip.

With ZS, I am in the camp that the stock is broken but the company is not. ZS certainly looks like a good buy here. I like to look at charts, though I have no TA expertise. I do have a standard chart that includes 20, 100, and 200 day moving averages and I do at least note whether they have crossed and do pay attention to the 200-day average. I kind of figure that if the price has fallen below the 200-day then that is one indication of a broken stock. During the first half of Augest, ZS sliced through the 20 and 100 day averages and last week it settled below the 200 before the drop this week to the level that preceded the 2/28-3/1 gap up (that gap has now been filled).

There is another metric that I have noted, and that has to do with the trading volume for the price drop. ZS's was 26 million shares the day after earnings but had been preceded by 3 or 4 high volume days of lower prices. Anyway, the metric is that the trading volume on subsequent days ought to match that of the "big drop day." The sum of the above is telling me that it is not yet time to buy ZS. The four days prior to earnings totaled 20 million shares--about 2.5 times normal. We've had about 12 million shares traded. That, plus the ever present tweet risk make me leery of buying today, before the weekend. I might buy back around 15% of the shares I sold pre-ER--do that towards end of the day. That's almost following 3-day rule and if ZS should recover Monday I'll give myself an attaboy and I'll still eel o.k. should ZS continue drift lower as the market soaks up the 25 to 50 million "down volume" shares traded before and immediately after the ER.

The company performance looks good to me for all the reasons discussed here and on other boards and by "other pundits". I expect to be fully reinvested by the end of next week--TBD. Of other stocks that I have mentioned, most are near the 200-day and seem to be holding above that level. THat includes MDB, OKTA, TTD, AYX, ESTC. SMAR and SQ, ..., UGH!, I am out of both.

One that I am looking at is ANET. If we go retro to 1yrPEG, that number is about 0.5, do your own diligence but I think that is what I came up with looking at 12 quarters.

I am over 30% cash and wanting to get back into CRWD and TTD and add to those that are holding near 200-day average. TWLO looks broken so not planning to go there for awhile though I am o.k. with the company. ROKU, I want, but price anchored a bit after my shares were called away.

KC
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