Salesforce long. Exit if it closes below the 100 day moving average.
After a very strong earnings report we are seeing Salesforce pull back to the 50 day and then 100 day moving average. Although the market has seen unusually high levels of volatility the last two months, this pattern is actually consistent with what we've seen with Salesforce since the start of 2017. Just taking a quick look at the chart you'll see CRM tends to do better the second and third months after earnings are released compared to the month just after they come out. After the previous four earnings releases we saw a pullback to the 50 day moving average within the next month and sometimes to the 100 day moving average, which it has't closed below since January 2017. On Wednesday CRM came within a percent or so of the 100 day MA and closed higher on Thursday on the 50 day MA to the penny.
Doing a Fibonacci retracement of the most recent rally from Feb 9 until the top in March shows that CRM opened Wednesday March 28 at the 0.618 retracement level, and closed slightly lower. The following day CRM opened at a support level, dipped very close to the 0.618 retracement intraday trading and then closed higher at the 50 day MA. In doing so, CRM formed a white soldier candle as part of a morning star reversal pattern, very bullish.
On Wednesday we also saw the CRM hit a level on the RSI that has acted as support for the past 20 months or so, and we saw a bounce higher the next day, another bullish sign.
I don't think anyone can say for certain that the recent market volatility and sell off is over, but the fundamentals of Salesforce are strong and the technicals are showing signs of a reversal. So between the 100 day MA, the Fibonacci retracement level, the morning star reversal and white soldier candle formation, and the support on the RSI, I feel confident about going long CRM for the coming weeks. The point at which I would exit this trade is if CRM closes below the 100 day moving average. My most optimistic price target for CRM is $137 by the end of April, but I have a target of $130-132 by end of April.
After a very strong earnings report we are seeing Salesforce pull back to the 50 day and then 100 day moving average. Although the market has seen unusually high levels of volatility the last two months, this pattern is actually consistent with what we've seen with Salesforce since the start of 2017. Just taking a quick look at the chart you'll see CRM tends to do better the second and third months after earnings are released compared to the month just after they come out. After the previous four earnings releases we saw a pullback to the 50 day moving average within the next month and sometimes to the 100 day moving average, which it has't closed below since January 2017. On Wednesday CRM came within a percent or so of the 100 day MA and closed higher on Thursday on the 50 day MA to the penny.
Doing a Fibonacci retracement of the most recent rally from Feb 9 until the top in March shows that CRM opened Wednesday March 28 at the 0.618 retracement level, and closed slightly lower. The following day CRM opened at a support level, dipped very close to the 0.618 retracement intraday trading and then closed higher at the 50 day MA. In doing so, CRM formed a white soldier candle as part of a morning star reversal pattern, very bullish.
On Wednesday we also saw the CRM hit a level on the RSI that has acted as support for the past 20 months or so, and we saw a bounce higher the next day, another bullish sign.
I don't think anyone can say for certain that the recent market volatility and sell off is over, but the fundamentals of Salesforce are strong and the technicals are showing signs of a reversal. So between the 100 day MA, the Fibonacci retracement level, the morning star reversal and white soldier candle formation, and the support on the RSI, I feel confident about going long CRM for the coming weeks. The point at which I would exit this trade is if CRM closes below the 100 day moving average. My most optimistic price target for CRM is $137 by the end of April, but I have a target of $130-132 by end of April.