Salesforce Gapped Higher On Better-Than-Expected Earnings. Here’s How To Trade The Stock Now

Salesforce Inc (CRM) beat earnings-per-share estimates after the closing bell on March 1. The cloud-based customer relationship software company held its 200-day simple moving average (SMA) at $160.10 on February 24. The stock gapped above its quarterly pivot at $170.33 on March 2. The open on this day was $193.12 for a gain of 15.3%. If you bought the open, you had a one-day loss of 3.3%. This is a warning that buying a gap open does not mean a daily gain.

Salesforce focuses on artificial intelligence software on cloud, mobile, and social platforms. The stock is not cheap. Its p/e ratio is elevated at 69.88% and it does not offer a dividend, according to Macrotrends. The company has beaten earnings-per-share estimates in twenty-four consecutive quarters.

The Daily Chart for Salesforce

The daily chart shows that Salesforce has been below a death cross for more than a year. This occurred as the 50-day simple moving average is below the 200-day simple moving average.

The stock set its 52-week low of $126.60 on December 21, and this day proved to be a positive key reversal day. This occurred as the close of $130.30 was above the December 20 high of $129.99.

Shares of Salesforce closed above its 200-day simple moving average at $161.37 on January 26, and traded as high as $178.84 on February 2. It then declined back to its 200-day SMA at $160.33 on February 24. The stock gapped above its quarterly pivot at $170.33 and traded to the March 2 high of $193.91. The stock ended last week at $186.43.

The four horizontal lines on the chart from the bottom to the top are the monthly value level at $153.76, the quarterly pivot at $170.33, and the semiannual and annual risky levels at $215.46 and $227.48, respectively.

The Weekly Chart for Salesforce

The weekly chart for Salesforce is positive with the stock well above its five-week modified moving average at $163.87. The stock is below its 200-week simple moving average or “reversion to the mean” at $196.92. The 12x3x3 weekly slow stochastic reading is rising at 73.49 on a scale of 00.00 10 100.00 where a reading above 80.00 is overbought and a reading below 20.00 is oversold.

Trading Strategy: Buy Salesforce on weakness to its quarterly pivot at $170.33. Reduce holdings on strength to its 200-week simple moving average or reversion to the mean at $196.92.