Salesforce.com Puts Its Positive Momentum to the Earnings Test

Salesforce.com has been golden -- as in a golden cross -- for over a year. Can it last?
By Richard Suttmeier ,

Salesforce.com (CRM) - Get Report , the enterprise cloud computing solutions company, has been strong and getting stronger for over a year -- until Friday, when reports of some insider selling of the stock by the company's CEO put a damper on the gains.

For the stock to regain its momentum, Salesforce needs a investor positive reaction to its earnings report after the closing bell on Wednesday.

Salesforce began the year above a "golden cross" that was confirmed on Oct. 2, 2014, when the stock closed at $56.64. A "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving average. This indicates the stock can go higher. The stock set an all-time high of $79.82 on Nov. 2. 

Analysts expect Salesforce.com to earn 5 cents a share. The stock began that Friday slide despite positive ratings by Wall Street. Of 31 analysts covering the stock, 27 have buy ratings and only one has a sell rating.

Here's Salesforce.com's daily chart.


Courtesy of MetaStock Xenith

Salesforce closed at $76.23 Monday, up 9.8% so far in the fourth quarter and up 28.6% for the year to date.

As noted, the stock began 2015 above a "golden cross" after closing at $56.65 on Oct. 2, 2014. The 50-day remains above the 200-day at $74.94 and $70.70, respectively.

Here's the weekly chart.


Courtesy of MetaStock Xenith

The weekly chart for Salesforce is positive but overbought with the stock above its key weekly moving average of $76.02 and well above the 200-week simple moving average of $52.23. The weekly momentum reading is projected to remain above the overbought threshold of 80.00 with a reading of 86.32.

Momentum scales from 00.00 to 100.00 with a reading below 20.00 oversold and a reading above 80.00 overbought. A rising reading above 20.0 is positive while a declining reading below 80.00 is negative. This study is shown in red along the bottom of the chart.

Investors looking to buy Salesforce should place a good till canceled limit order to buy the stock if its drops to $61.18, which is a key level on technical charts until the end of the year.

Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $81.14, which is a key level on technical charts until the end of 2015.

There are key levels of $73.09 and $74.96 in play until the end of 2015 and until the end of November, respectively.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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