Salesforce hasn't had an easy run over the past 15 months. Before that, obviously, the stock had been on an incredible run as naysayers and bears continued to argue about its valuation and business.
But even through the tough times, Salesforce didn't break down in the manner in which shorts were hoping for. That’s not to say it didn’t have volatility, but overall the past year has been mostly a consolidation phase.
In October 2018 - 15 months ago - Salesforce topped out at $161.19. It was ultimately flushed down to $113.60 amid the stock market rout in which a number of names were hammered. That includes Apple (AAPL) - Get Report, Roku (ROKU) - Get Report, and many of the other big winners from the past year.
From peak to trough, Salesforce stock slid about 30%. After recovering in the first quarter of 2019 though, instead of powering higher like the names above, shares chopped in a sideways to lower pattern.
Now that pattern is ending and bulls are back in control. Can they keep up the momentum? Let’s look at the charts.
Trading Salesforce Stock
Salesforce faced major resistance between $166 to $167. It tested that mark repeatedly throughout 2019 before erupting through this level on Monday. Ignoring it would be foolish, as it was the market’s way of saying that it’s “go time.”
Shares closed right near the high of day, and despite opening lower on Tuesday bulls again took this name higher for more gains. Shares are now technically overbought in the short term but that doesn’t mean they will unwind anytime soon.
What triggered this move?
It started back in October, when the stock burst off the $141 level and quickly reclaimed downtrend resistance (blue line) and the 200-day moving average near $154. That was a 10% rally in just a few days that many investors would have expected to peter out. Instead, it sparked an even larger run, which did eventually end with a test of $166 resistance.
After pulling back, the 200-day moving average was support and gave bulls enough rest to take Salesforce stock back up to resistance. This time, it underwent a major breakout.
While buying near $175 after the fact may not be optimal in the short-term, Salesforce still looks good in the intermediate- and long-term provided it is able to hold up over the breakout area between $166 to $167.
Above this zone is bullish.