Jim Cramer told viewers of his Mad Money program Friday night about how Salesforce.com (CRM) will host its Investor Day this Tuesday. This couldn't come at a better time following the company's just-announced plan to acquire Slack Technologies (WORK) , Cramer reasoned.
We looked at the charts of CRM on Dec. 2 and concluded that, "The purchase of Slack may be a good strategic move for CRM, but in the near term the stock price looks vulnerable to a decline. Stand aside from the long side as we could see a decline into the $210-$195 area in the weeks ahead. This potential decline may turn out to be a buying opportunity."
Let's review the charts again to see if we can glean any further clues.
In the daily bar chart of CRM, below, we can see a mixed picture with bullish and bearish clues. The shares have gapped to the downside and are trading below the declining 50-day moving average line. Sometimes downside gaps will start a trend lower and other times the gap is sort of a "shake out" and prices can rebound. So far CRM has not started a down leg.
Volume has been heavy as traders voted with their feet and the On-Balance-Volume (OBV) line has turned lower telling us that sellers of CRM have been more aggressive.
The 12-day price momentum study is a potential bright spot. Prices have made lower lows from the end of October to early December but the momentum study has made equal lows -- this is a bullish divergence and could foreshadow a price recovery.