While the stock hasn’t been a terrible performer, it simply hasn’t done much. Like some of its larger mega-cap tech peers such as Amazon (AMZN) - Get Report or Nvidia (NVDA) - Get Report, Salesforce continues to trade in a sideways manner.
Investors are hoping that earnings on Thursday will help break it out of this consolidation. Worth mentioning is that Nvidia will report earnings Wednesday after the closing bell.
In any regard, Salesforce stock exploded higher in late August on better-than-expected earnings. The stock posted a 26% one-day rally in response, hitting new all-time highs.
Will this time be different, or like its peers will Salesforce fail to regain momentum on earnings?
Since popping to its highs in August, Salesforce stock has been putting in a giant bull flag pattern, consolidating in a series of lower highs and lower lows.
Even if the post-earnings reaction isn’t a robust move to the upside, bulls can secure a victory as long as the stock doesn’t go on to make new lows. Or at least, that’s the case in my mind.
After reclaiming the 50-day moving average at the start of the month, Salesforce stock is finding this measure as support.
On the flip side, it’s below the 10-day and 21-day moving averages, with the latter acting as resistance.
If the reaction is bearish, bulls want to see the 200-day moving average and the $216 area act as support. If the latter is in play, so too might the most recent low from January, at $213.70.
We could see a slight undercut of this level before the stock quickly reclaims it. That’s about the only “new low” scenario that would be acceptable, but let's not get too in-depth on the hypotheticals.
Below $213.70 and channel support is on the table.
On a bullish reaction, I’d love to see Salesforce stock break out over channel resistance and clear the February highs near $250.
That could put $270 in play, followed by the all-time high up at $284.50.