Slack Technologies, Inc. (WORK) has jumped sharply Wednesday afternoon, after a media report that Salesforce.com (CRM) has held talks to buy Slack. Reports say that this would be Salesforce's biggest acquisition yet. Slack -- and responsible journalists -- remind readers that there's no guarantee the talks would result in a deal. Nevertheless, let's check out two charts.
In this daily bar chart of WORK, below, we can see that prices have been correcting lower the past six months. Earlier this month prices failed to break the September low and subsequently began a rally that has just turned into a possible M&A deal. Prices have shot above the rising 50-day and the rising 200-day moving averages. The OBV line is improving and the MACD oscillator is crossing the zero-line for a buy signal.
In this daily Point and Figure chart of WORK, below, we can see a potential upside price target of $39.64 -- pretty darn close.
Bottom line strategy: Rumored deals are very hard to trade, as the market-moving news happens in a private board room. There may be a deal and maybe there is not a deal. The price could be lower or higher. Other bidders might appear. All of this is crazy to handicap.
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