Is Salesforce a Buy on Earnings? Let’s Look at the Charts

Salesforce is set to report earnings on Tuesday as shares hover near their highs. Let's look at the charts to get a better handle on the stock.
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Salesforce  (CRM) - Get Report is such an interesting play right now for investors. Particularly ahead of its earnings report scheduled for Tuesday after the stock market closes.

On the one hand, the stock has risen 80% from its March lows and is hovering near its recently created all-time highs.

On the flip side though, it has certainly not commanded the attention that Amazon  (AMZN) - Get Report, Apple  (AAPL) - Get Report, Tesla  (TSLA) - Get Report and others have over the past few months and weeks. In fact, the stock has done a relatively good job of flying under the radar.

Salesforce has had solid momentum as it slowly but surely grinds higher. That said, last quarter management delivered below-consensus revenue and earnings guidance while slightly trimming both figures for its full-year outlook.

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Trading Salesforce Stock

Daily chart of Salesforce stock.

Daily chart of Salesforce stock.

The stock cleared its February highs in July, but Salesforce couldn’t maintain momentum. That said, the 50-day moving average and uptrend support (blue line) held firm, guiding shares to another breakout earlier this month, albeit one that failed once again.

However, failed breakout aside, there are always clues to glean from the technicals.

For instance, while the breakout failed twice, the third time seems to be working well, as Salesforce stock is holding up over the $195 mark. We now know $195 was significant resistance.

Should we get a post-earnings pullback to this area, let’s see that $195 acts as support. In that event, even though the reaction is bearish, the price action may very well tilt bullish if this level holds as support — particularly as it's in conjunction with the 50-day moving average and uptrend support.

Below the 50-day moving average and $183 is in play, followed by the 200-day moving average.

On the upside, let’s see if shares can clear $210 resistance, opening up upside targets like the 123.6% extension at $114.70 and the 161.8% extension at $226.44.

It would be encouraging to see Salesforce stock play catch up with some of its larger cap peers, such as those listed above. That said, shares are up 80% and near the highs coming into the print. Let’s see how the stock reacts on Wednesday morning.