Salesforce.com (CRM) is the Real Money Stock of the Day. CRM is a cloud software giant that just posted another strong quarter that included a five-cent-a-share earnings beat. The latest chart shows a two-day reversal pattern -- more on that below.
Our own Jim Cramer spoke with Marc Benioff, chairman and co-CEO of Salesforce for his first "Executive Decision" segment of Mad Money Tuesday night. Benioff said the digital transformation rages on and is something every company is now involved with. The transformation even applies to the federal government, where CRM has won contracts at several departments and is helping usher in the next revolution in government.
In the daily bar chart of CRM, below, we can see that prices broke below the cresting 200-day moving average line and closed weak (near the low of the day) on Monday. Prices rebounded sharply with the broader market and closed strong on Tuesday. Technical analysts sometimes call this a "two-day reversal" where one day prices close weak (within 10% of the low) and the next day prices close strong. This can often happen on a Friday and a Monday and the pattern also plays out over two weeks and tends to have more meaning.
CRM is trading sharply higher in early trading Wednesday. Prices are indicated around the middle of what I would consider resistance -- the $150 to $166 area and the underside of the declining 50-day moving average line. This area should be a "battleground" between bulls and bears Wednesday. If CRM can close more than halfway through the resistance zone on expanding volume it will be impressive. Very impressive.
Meanwhile, Tuesday's rebound did not do much for the On-Balance-Volume (OBV) line and momentum has not (yet) turned positive.
Bottom-line strategy: My current view of the broad market is bearish so I tend to be skeptical of rebounds and have used a "rule of thumb" for years: only pay attention to reversals in trends, up or down, that last more than three days. Let's see how the chart of CRM looks at the closing bell Wednesday.