Here’s how I’m trading Salesforce ($CRM). (June 10, 2020)
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I want to talk about Salesforce ( NYSE: CRM ). If we are just looking at the closes as opposed to this intraday spike here. I can draw a line basically down around like that, and then I can do another one, with squinting the eyes and a little imagination, right up there.
We have had this volatility compression, this volatility squeeze. And then just today the stock broke out on slightly heavier than average volume. The market, at the same time, the Nasdaq ( NASDAQ: QQQ ) was okay, it’s up over a percent. CRM ( NYSE: CRM ) was up 4 percent, which would be better, wouldn’t it? And so I am looking at this stock as a huge outperformer today.
I think this has got more potential upside; I would look for kind of an initial price target of $200.00, which would be at a new high. And why wouldn’t this set a new high, everything else seems to be? I think you could be making this trade right here and then you wind up kind of putting a stop, you want to give it kind of a tight stop because when the market, listen to me, I’m giving you pearls here, the market is pretty overbought. Breadth is declining, fewer stocks are working; the big cap ones are the ones that are kind of leading the way but not many stocks are following so that’s a little bit of a red flag.
So with that said, think about exactly what’s happening to create this dynamic that I just talked about. Breakouts aren’t really working, if they were working then breadth would be good and everything would be happy. We would all be skinny, good looking, we’d be in great shape, and the future would be bright for all of us. But that’s not the way it is, at least not for me.
We’ve got this market that’s kind of weakening a little bit, which means that breakouts would be suspect. You’d think well maybe we are going to get more selling into those; kind of like we saw with Advanced Micro Devices ( NASDAQ: AMD ); looking good, looking good back here. You get a nice move here, a big breakout and then today, bam, there’s the breakout, oh crap. It might still work but the stock looks like it might pull back a bit.
The point is, we could see that with Salesforce ( NYSE: CRM ). And so because of that, I don’t feel like I want to keep a stop way down here below 170.00 or down here below the 50-day moving average, I am trading the potential for a breakout.
I took a partial position in this stock today and what I am going to do is, I am hoping, I know hope isn’t a method but it is often used as a trading strategy, but I am hoping for a move to the upside. But if this puppy even twitches; if this thing comes down to even 177.00 or something like that, I’m going to be out of there; because I don’t want to be buying a stock that had a breakout that turned out to be a fake-out. That’s how I would trade Salesforce ( NYSE: CRM ).
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