Salesforce Stock Could See Further Weakness in the New Year

Time to examine CRM's charts again.

During Tuesday's Lightning Round segment of Mad Money one caller asked Jim Cramer about Salesforce.com CRM. "Salesforce was up big today but still has more to go," Cramer replied.

We looked at CRM earlier this month on Dec. 3 and wrote that, "I have been looking at the charts of CRM for several years now and they remind me of a cat with nine lives as the uptrend continues and continues. Can CRM restart its uptrend again this time? I am not convinced and do not find enough technical clues to recommend a new long position just yet." 

Let's check out the charts of CRM again.

In the updated daily bar chart of CRM, below, we can see that prices have been struggling this month. CRM is trading below the declining 50-day moving average line but remains above the rising 200-day line. The On-Balance-Volume (OBV) line still shows an irregular decline from late August telling us that sellers of CRM have been more aggressive.

The Moving Average Convergence Divergence (MACD) oscillator is below the zero line and only manages a cover shorts buy signal at this point in time. 

 

In the weekly bar chart of CRM, below, we see a mostly negative picture. The shares may have formed a bear flag pattern -- prices have a sharp drop followed by a drift higher before there is another shot lower. Trading volume is typically heavy on the decline and is much lighter on the drift to the upside. The OBV line shows a peak in August and only an "uptick" in December so far.

 

The MACD oscillator is in a take profits sell mode.  

 

 

 

In this daily Point and Figure chart of CRM, below, the software is reading the activity since September (look for the "9" on the chart) as distribution or selling. There is a significant downside price target in the $166 area and I am not all that sure that the other charts are that bearish.  

 

 

Bottom-line strategy: The charts of CRM have been showing weakness since September and I do not find enough technical evidence that the decline is over. Remain defensive for now.

 

(Salesforce.com is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells CRM? Learn more now.)

Employees of TheStreet are prohibited from trading individual securities.