Granted, Salesforce stock put in a big rally ahead of earnings on Tuesday. In fact, the whole market did, particularly technology stocks. But that said, I thought we'd see more of a rally in Salesforce given the quarter.
The company beat on earnings and revenue expectations, while second-quarter guidance for revenue came in slightly ahead of consensus estimates. More importantly though, the company raised its full-year earnings outlook, with both earnings and revenue forecasts coming in ahead of analysts' expectations.
So a top- and bottom-line beat with a bump to full-year guidance can't even boost Salesforce 3%? It took a few hours for investors to get on board. Still, this is a high-growth stock that has been flat since early February and is below the levels at which it entered the fourth quarter of 2018.
Salesforce stock is trying to move higher at a time where -- short of a one-day rally -- mega cap tech is struggling. Amazon (AMZN - Get Report) , Alphabet (GOOGL - Get Report) and Facebook (FB - Get Report) are under pressure for antitrust concerns, while Apple (AAPL - Get Report) has a China/tariff stigma attached to it.
Can Salesforce shake out of this funk and press up to new highs?
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Trading Salesforce Stock
Salesforce stock has been chopping between $152 and $166 for four months now. Shares were essentially rangebound, with the exception of this week, where the stock violently broke through support, only to reclaim the 200-day moving average on the same day it was set to report earnings.
For traders, maneuvering around earnings is hard enough, but this type of action makes it almost impossible. For investors, these types of plunges can often lead to decent buying opportunities.
In any regard, Wednesday's pop gives us something to work with. Throughout May, CRM stock was being squeezed lower by its 20-day moving average and downtrend resistance (blue line). Note that these metrics overlap quite a bit on the chart over the last few weeks.
I would like to see Salesforce stock maintain $154.82 now, essentially keeping it above these short-term resistance marks. For now, the 50-day moving average is holding Salesforce in check.
Should CRM stock reclaim the 50-day, it will open up the door to a test of $160 and then range resistance up near $166. That will put it near new-high territory if it can get there. Should the 50-day keep Salesforce stock under pressure, look to see that it maintains range support near $152.
In short, watch the 50-day - over it opens the door to potentially higher prices and below it brings a potential test of key support.
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