Salesforce Soars Over 10% On Q3 Earnings, But The Chart Shows Resistance Approaching

Summary:

• Salesforce.com, Inc. CRM soared on Wednesday, trading over 10 percent higher after posting earnings that beat Wall Street expectations.
• Our view is that it is likely to trade into its resistance zone, followed by a period of decline.

Salesforce.com Stock Weekly Chart

The cloud software company reported earnings per share of $0.61 and total revenue of $3.39 billion, above analyst estimates of $0.50 and $3.37 billion. For Q4 and FY19, management’s forecast for earnings and revenue beat analyst estimates.

A beaming Marc Benioff exclaimed, “That was fabulous third quarter. It was all about the cloud, artificial intelligence, machine learning and deep learning.”

Our analysis is based on the stock’s market cycles. Viewed as such, Salesforce has now begun the rising phase of its current cycle, which is timely based on our work. Yet the previous cycle fell below the point from which it started, which indicates a new negative trend is now in place.

Given this, we believe Salesforce is likely to fail at the resistance zone between $137-$142. In that zone, we believe the stock is a good sell, with likely further declines into early 2019.

Related Links:

The Street's Reaction To Salesforce's Big Q3 Beat

Wall Street Reacts After Salesforce Q2 Beat: 'Hard To Shake A Stick At'