Despite some market-wide volatility on Thursday, Salesforce hitting new 2021 highs on the day. It’s got bulls wondering how far this rally can go.
The company delivered a top- and bottom-line beat and issued strong guidance. That was enough for bulls to bid the stock higher.
Despite the company’s continually strong results, the stock hasn’t had much traction over the past year.
Maybe that’s because of its acquisition of Slack. Perhaps it’s just one of the laggards, like Amazon (AMZN) - Get Amazon.com, Inc. Report is now or Nvidia (NVDA) - Get NVIDIA Corporation Report was earlier in the year.
Either way, investors are now looking for a breakout.
Trading Salesforce Stock
Salesforce was not an easy pre-earnings trade. When the company reported for the same quarter a year ago, it sent the stock to all-time highs as bulls cheered the results.
However, those gains were short-lived after tech stocks underwent a painful but necessary pullback.
In June, the stock broke out of a downward channel and reclaimed its major moving averages. It slowly but surely set the tone for a nice bullish rally ahead of earnings.
That’s what made it tough as traders don’t like to buy something at or near the highs ahead of a binary event. For Salesforce stock, it made new 2021 highs earlier this week.
With today's gap into and rally over resistance though, we have a much better outlook on the stock.
On the upside, the all-time high at $284.50 is our first upside target. Above that opens the door to $300. Should Salesforce achieve these two objectives, longer-term traders can use the 161.8% extension near $335 as their next price target.
On the downside, we need to see Salesforce stock hold up above the $265 to $270 resistance zone while we wait for the short-term moving averages to catch up.
If it can do that, the bulls will remain in control - it’s as simple as that.