CrowdStrike Is a Bear That’s Just Getting Started

A buyers strike in growth stocks has grown in its commitment this week. Shares of CrowdStrike (NASDAQ:CRWD) have been a certain casualty. But does cheaper offer more secure value for CRWD stock bulls eyeing a purchase?

A sign with the Crowdstrike (CRWD) company logo

Source: VDB Photos /

With that in mind, here’s a closer look at some of what’s happening in CRWD. After we’ve established context for where it is today, I’ll offer a risk-adjusted determination based on those findings.

You wouldn’t know it by the looks of the Dow Jones Industrials or S&P 500, which bullied their way to record closes Tuesday. For its part, the Dow grinded higher by 0.60%, while the S&P gained a similar 0.55% on the back of a stronger economic recovery … well kinda sorta.

How CRWD Stock Reached This Point

At the same time, Tuesday was a more outwardly looking ugly session. That was particularly true for market bellwethers inexorably tethered to growth and maybe more sensitive to rate hike fears and omicron.

The large-cap tech heavy Nasdaq gave back a bit more than 1.25%. But it was Cathie Wood’s once hotter-than-hot, growth-centric Ark Invest ETFs that continued to deal with payback.

Following 2020’s incredibly greedy bullish tidings and last year’s bear market losses, Tuesday saw Ark Invest funds shed roughly 3.75% to nearly 5% depending on investors flavor of growth.

Yet in a market made up of those more volatile growth stocks responsible for driving the larger losses, CRWD stock has begun to reveal itself as a greater danger. In fact, Cathie & Co. already exercised their less-publicized right to offload risk in this company.

In early May 2021, the firm closed out its entire 300,000-plus share position in the cybersecurity play over a handful of sessions. You could say the decision to sell was early as CRWD shares did gain roughly 50% more at by their peak valuation in early November.

Still, and if we’re to trust some Wall Street lore that says “investors are only allowed to nail down a top once in their lives,” it might be appreciably harder to blame Ark’s actions in CrowdStrike.

More important than Ark building up that type of investing mythos, today the issue is other bearish folklore coinciding with Cathie’s exit. This is a case of “it’s better to be late and sell, versus looking for a bottom” in CRWD stock.

A Closer Look at CrowdStrike’s Weekly Price Chart

CrowdStrike Holdings (CRWD) bearish flag signal warns of deeper bear market in CRWD stock
Source: Charts by TradingView

Speaking of famous sayings, another popularized by CNBC’s James Cramer goes something like this: “There’s always a bull market somewhere.” More importantly, reading between the lines, bearish cycles exist and are probably best avoided. Right now that kind of phase appears to be gaining authority in CRWD stock.

Corrections of about 30% in growth stocks of CrowdStrike’s caliber happen all the time. Even in healthy markets where seemingly all risk assets are going up, there will invariably be a dearly held name or more precisely, quite a few dealing with that reality.

And at the moment CRWD shares have lost nearly 39% of their valuation in just under two months from their all-time-high.

So CrowdStrike shares are a bargain, right? Wrong.

The weekly price chart and also knowledge that bearish cycles often grow much larger in slightly trickier environments caution otherwise. Teladoc Health (NYSE:TDOC) and Zoom Video (NASDAQ:ZM) are two other significant Ark stock holdings that have witnessed much larger bear markets than CRWD and which Cathie & Co. probably wish they had the foresight to pull the plug on long ago.

Again though, don’t discount CRWD from catching up to its one-time, damaged peers.

Technically, and as hinted at earlier, a bearish flag pattern stationed around CRWD’s 38% Fibonacci level signaled with Tuesday’s selloff. Coupled with a stochastics indicator crossing bearishly in oversold territory and widening, unsupportive Bollinger Band, the price chart is warning of lower prices in CrowdStrike.

How low and when will cheaper prices indicate stronger value in CRWD stock?

A bottom could happen at the 50% retracement level, but I’m not confident it will. And reasonably it’s my contention the 62% and 76% supports could come into play before all is said and done.

Ultimately, now is not the time to be picking a bottom in CRWD stock. Attempts to locate a collision between growth and value is best left for another day when CrowdStrike can offer decidedly stronger bullish evidence off and on the price chart.

On the date of publication, Chris Tyler holds long positions in Ark Innovations ETF (ARKK) and Ark Genomics Revolution ETF (ARKG) (either directly or indirectly) but no other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.

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