# Inflation finally cools, traders expect the Fed to pause — long growth software like CrowdStrike and Palo Alto

_AI-generated trading idea · LONG · CIBR, CRWD, PANW_

> Canonical page: https://commonquant.ai/research/for-you/inflation-finally-cools-traders-expect-the-fed-to-pause-long--d722796f-617e-463a-b876-864575d75183

Fresh data shows US inflation actually fell last month for the first time in years, prompting traders to bet the Federal Reserve won't raise interest rates again. This triggered a huge relief rally in the stock market, with fast-growing software and cybersecurity stocks leading the charge higher.

## Idea

When the cost of living drops unexpectedly, the stock market breathes a sigh of relief because borrowing money stays cheap. Fast-growing tech companies like CrowdStrike and Palo Alto Networks rely heavily on business investment, so their stocks react violently and jump higher when the pressure of potential rate hikes disappears. With bond traders now slashing their expectations for future rate increases to just 20%, this creates a perfect environment for these types of stocks to run. The initial 7% to 11% pop in cybersecurity shares is likely just the start of a broader rotation back into high-growth technology.

## Advanced Analysis

### Verdict: thesis proven, but wait for the trigger

The inflation catalyst landed exactly as the thesis predicted — per Bloomberg, US CPI fell month-over-month for the first time since 2020, and Yahoo Finance confirmed CrowdStrike jumped 11% while Palo Alto rose 7% that session. The recommended ROC period 2 variant passed its untouched holdout with an 18.0% return and a 63.2% win rate across 19 trades, meaningfully beating the baseline's 11.3%, and both companies generate substantial free cash flow ($1.31B for CRWD, $3.47B for PANW). But the 60-month backtest endured a 44.7% maximum drawdown with only a 42.7% win rate across 82 trades, and CRWD currently sits at $203.08 — roughly 51% below its 20-day SMA of $412.6 — meaning the stock would need an extraordinary move just to reach its entry conditions. The setup is not live today: CIBR's rate of change reads 0.51% against a 5% threshold, and PANW's is 1.32%, so both need a fresh momentum surge to trigger. \*\*Conviction breakdown:\*\* \*Thesis support\* scores high at 78 because the macro narrative played out exactly as described on July 14 with corroborating price action. \*Trade readiness\* scores 35 because no ticker currently clears the 5% rate-of-change hurdle and OBV readings are unavailable in the live feed. \*Risk quality\* scores 45 given the 44.7% historical drawdown and CRWD's catastrophic tail signature (kurtosis of 289.2 and skewness of -14.91). \*Backtest evidence\* scores 62 given a walk-forward-validated setup with an 18.0% holdout return but a thin 42.7% full-sample win rate. \*Fundamentals trend\* scores 70 for strong revenue growth (CRWD up 112%, PANW up 14.9%) and top-quintile cash generation, tempered by CRWD's -6.1% operating margin and PANW's current ratio of 0.94.

#### Conviction score breakdown

Composite score computed by the server from the applicable evidence-tier dimensions.

| Measure | Value |
| --- | ---: |
| Thesis support | 78/100 |
| Trade readiness | 35/100 |
| Risk quality | 45/100 |
| Backtest evidence | 62/100 |
| Fundamentals trend | 70/100 |
| Score | 58/100 |
| Composite Score | 58/100 |
| Evidence Tier | backtested |

### Trade now

\*\*Action today: wait.\*\* None of the five eligible tickers have triggered an entry. The strategy fires on a convergence of three conditions: a 2-day rate of change above 5%, positive on-balance volume, and a close above the 20-day simple moving average. Only the moving-average condition is broadly met — CIBR closed at $92.36 against its SMA of $90.00, and PANW at $358.68 against its SMA of $318.03 — but neither has the momentum to clear the ROC hurdle.

The live distance-to-trigger varies sharply by name. CIBR's ROC (2) sits at 0.5% and needs to reach 5%, a gap of 4.5 percentage points. PANW is closer at 1.3%, needing another 3.7 points. CRWD is the most dramatic case: its RSI has dropped to 17.0 and the stock trades at $203.08, more than $209 below its 20-day SMA of $412.6. That is a deeply oversold condition, but it means CRWD would need to surge roughly 50% from current levels just to reclaim its moving average — the momentum breakout framework is not designed to catch a falling knife of that magnitude.

Once an entry triggers, the stop is a 10% fixed loss on position value, or a close below the second-ranked support level — $190 for CRWD, $91.00 for CIBR, and $340 for PANW. The take-profit ceiling is 20% to 21% from entry. Position sizing uses a fixed-risk model: roughly 2.3% of portfolio equity risked per trade with a 10% stop, capped at 20% max position size. Over the 60-month backtest, this configuration produced 82 trades with a 42.7% win rate and a 31.7% net return, though it endured a 44.7% maximum drawdown — a figure that demands conviction in the process through extended losing stretches.

"Wait" means concretely: no positions until ROC (2) pushes through 5% on volume for CIBR or PANW. The OBV readings are currently unavailable in the live feed, so that condition cannot be confirmed or denied — monitor it manually on your charting platform. A recommended parameter adjustment (shifting the ROC period from 1 to 2) was selected through bounded walk-forward testing and may be applied before the strategy goes live; it showed an 18.0% holdout return with a 63.2% win rate across 19 trades.

#### CIBR price and trigger map

Uses the idea timeframe and keeps price levels on the price axis.

| Measure | Value |
| --- | ---: |
| Ticker | CIBR |
| Timeframe | 1d |

#### CRWD price and trigger map

Uses the idea timeframe and keeps price levels on the price axis.

| Measure | Value |
| --- | ---: |
| Ticker | CRWD |
| Timeframe | 1d |

#### PANW price and trigger map

Uses the idea timeframe and keeps price levels on the price axis.

| Measure | Value |
| --- | ---: |
| Ticker | PANW |
| Timeframe | 1d |

### Why the bull case still has support

The idea's core argument — that cooling inflation and a dovish Fed pivot would ignite high-growth cybersecurity stocks — played out exactly as described on July 14. Per Bloomberg, US CPI fell month-over-month for the first time since 2020, and a separate Bloomberg piece reported that Treasury traders slashed July hike odds to just 20%. The Yahoo Finance article confirms the…

#### CRWD Free cash flow

Free cash flow trend from CommonQuant fundamentals/XBRL data; +208.8% from first to latest point.

| Measure | Value |
| --- | ---: |
| 2018-01-31 | $-81672000 |
| 2018-04-30 | $-15042000 |
| 2018-07-31 | $-49205000 |
| 2018-10-31 | $-60440000 |
| 2019-01-31 | $-58819000 |
| 2019-04-30 | $-14126000 |
| 2019-07-31 | $-41958000 |
| 2019-10-31 | $-33012000 |
| 2020-01-31 | $19745000 |
| 2020-04-30 | $88883000 |
| Latest Value | $88883000 |
| Change Pct | $208.8292193162895 |
| Ticker | CRWD |
| Timeframe | reported periods |

#### PANW Free cash flow

Free cash flow trend from CommonQuant fundamentals/XBRL data; +147.9% from first to latest point.

| Measure | Value |
| --- | ---: |
| 2011-07-31 | $19102000 |
| 2011-10-31 | $17860000 |
| 2012-01-31 | $40640000 |
| 2012-04-30 | $47197000 |
| 2012-07-31 | $62803000 |
| 2012-10-31 | $19061000 |
| 2013-01-31 | $47347000 |
| Latest Value | $47347000 |
| Change Pct | $147.86409800020942 |
| Ticker | PANW |
| Timeframe | reported periods |

#### CRWD sector percentile check

Ranks CRWD against 603 companies in its sector using CommonQuant fundamentals.

| Measure | Value |
| --- | ---: |
| Free cash flow | \95.6882255389718th percentile |
| Gross margin | \80.95238095238095th percentile |
| Rnd Intensity | \75.96899224806202th percentile |
| Revenue growth (YoY) | \75.47169811320755th percentile |
| Ticker | CRWD |
| Sector | Information Technology |
| Peer Count | 603 |

### Scores

- **Conviction score breakdown:** 58
- **Thesis support:** 78
- **Trade readiness:** 35
- **Risk quality:** 45
- **Backtest evidence:** 62
- **Fundamentals trend:** 70

### Watch items

- **CIBR — ROC (2)**
- **PANW — ROC (2)**
- **CRWD — RSI (14)**
- **CRWD — Price vs Support\[2\]**
- **CIBR — OBV**
- **CIBR — ROC (2) above 5**
- **CIBR — Price above SMA (20)**

## Key details

- Symbols: CIBR, CRWD, PANW
- Timeframes: D1, H4
- Tags: \#rate-cuts, \#software, \#inflation, \#growth, \#long-bias

## Community

- Upvotes: 19
- Views: 265
- Copies: 0
- Cosigns: 0

## News sources

- [CrowdStrike Climbs 11%, Palo Alto Rises 7% as Cybersecurity Stocks Rally on Cooling Inflation](https://finance.yahoo.com/markets/stocks/articles/crowdstrike-climbs-11-palo-alto-171612684.html) — Yahoo Finance
- [Traders expect Fed to skip July rate hike as inflation cools - Reuters](https://news.google.com/rss/articles/CBMiowFBVV95cUxPejVocHU3MHFoUThMM0FoSk5ILWllYXdVa09OYmEtTjFoelpoVFl3T2kyYUR3UE85SnVLb01CbjV4TkJhMC0zajNCUHhza3c5RnJJaElFbnUyMV9YSmJ6VDUtWHFBUEdwSHd4eWUxMjNONzd2SS1zaENIdVJfWFFmX200YnV3Ym5YekpxVXBjVm91OWRXUy1xVTJHbkE4cHFOTDJF?oc=5) — Reuters
- [Treasuries Rally as Cool CPI Data Cuts July Fed Hike Bets to 20%](https://www.bloomberg.com/news/articles/2026-07-14/treasuries-rally-as-cool-cpi-data-cuts-july-fed-hike-bets-to-20) — Bloomberg
- [US CPI Falls for the First Time Since 2020, Core Gauge Flat](https://www.bloomberg.com/news/articles/2026-07-14/us-cpi-falls-for-the-first-time-since-2020-core-gauge-unchanged) — Bloomberg

## Related

- [CIBR trade ideas](https://commonquant.ai/stocks/cibr)
- [CRWD trade ideas](https://commonquant.ai/stocks/crwd)
- [PANW trade ideas](https://commonquant.ai/stocks/panw)
- [Latest market news](https://commonquant.ai/news)

## About CommonQuant Research

Ideas and Advanced Analysis are generated with fresh, LLM-selected news headlines and grounded in SEC XBRL fundamentals and peer percentiles. Strategies built from these ideas are automatically backtested (12-month and 5-year, walk-forward tuned) and stress-tested before they can go live, then monitored against the news hourly while they run.