Momentum darling Salesforce.com is down nearly 10% today after disappointing earnings last evening. In recent posts, I have been touching on the topic that many high growth leaders since the 2009 bull market have either showed major signs of slowing down, or have outright rolled over, such as GMCR and NFLX. Most traders glance at the Salesforce action today and figure that if they have no position then they missed the move, either lucky to not be caught long, or not ballsy enough to have shorted it into earnings. What I like to do in a situation like this is look at the broader view of the stock, since my reasoning is that I may gain an edge there, as most traders are preoccupied with the short-term machinations in this issue.
The weekly chart of Salesforce shows that the major uptrend since 2009 has been broken. That alone, however, is insufficient to say that the stock is about to crash–It could easily be resetting its base count before resuming the march higher. Instead, note the 50 period weekly moving average now acting as tough resistance as it flattens out begins to turn down. Since August, Salesforce has been trapped in a vicious trading box, complete with sloppy price action. To my eye, the bulls absolutely must hold $109 as support, otherwise a fast and furious move down to the low-$90’s looks to be in the cards. Should that happen, the bears will have won the “War Box” we would be looking at the other side of the mountain, which always gets uglier than most think is possible.
Salesforce.com may be down heavily today, but looking at the longer-term view can help give you parameters as to where the stock can go beyond the initial earnings shock.
Chess, will you short it?
Definitely not today. Below $109 like I said and I would look at it for sure.
Chess, How about on a failed bounce? A lower high might provide another short opportunity.
Yes. Good point. That’s why I am looking at the “War Box” as the goalposts.
that photo is creep~ass. I think that guy should be holding on rather than kicked back.
Crazy action. I don’t know how anyone can see -10% moves in high flying stocks and go long.(ANY NAMES)
Currently, I’m watching Priceline for a break such as the one in CRM. You might be interested in CMG also. It’s close to important levels.
I’m kicking myself as I missed this CRM move on Thursday while I was on other things. Anyways, hopefully I can catch a downward move in the two names I’ve mentioned.
Completely agree with you re: stalking PCLN
Chess, I consider myself to be an “advanced beginner” in options trading, So really appreciate your posts and find them helpful and educational. I have 3 questions if you don’t mind.
1. CRM – you mention the 109 support; do you see anything that may be a short term pop on the upside as shorts cover their positions?
2. I made some nice money yesterday by closing out my put options on PCLN and the stock continues to drop. What are your thoughts on the next support levels for this stock?
3. Thoughts on where GOOG is headed?
Thank you for your time and great articles.
Thanks, Mary. I think you would enjoy our 12631 Service inside The PPT. Let me know if you want more details.
1) If $109 holds in CRM I think dip-buyers will give it a shot but as long as it remains in that sloppy weekly range on my chart above I’m not going long it.
2) PCLN bulls need $500 to hold. Below that a quick move to $470/$480 can happen.
3) GOOG is holding up very well and if the overall market improves it can scream much higher above $630, which is key.
Thank you, and yes, please feel free to send me details on the 12361/PPT services.
Thanks, Mary See this about PPT http://ppt.ibankcoin.com/learn-more.php and this about 12631 http://12631.ppt.ibankcoin.com/learnMore/ 12631 is a trading service available only to PPT members.
i joined! Thx Chess.
Mary / NYC
Great, Mary! Let me know if you have any questions.
Having just read the post (a couple ago) I just would like to say…I have been trading a long time…b/4 there was an internet (seems like only yesterday) it has taken me a long time to realize and adopt the attitude that I see here everyday. Forget emotions and everyone else’s opinion and let the market show you what to do. Lets face it…Fly is fun to read…but Chess is my man! And please don’t stop posting those pictures of those beautiful girls…like I said I am old but not dead. Thanks Chess
Thank you, sir. Appreciate it.
AMZN breaking below 200 doesn’t look good for the bulls either.
Still have a hard time figuring out how the Russell is holding up as well as it is. TZA has not been as helpful in this drop as I would have expected.