Salesforce Gapped Higher On Better-Than-Expected Earnings. Here’s How To Trade The Stock Now

Salesforce Inc. (CRM) exceeded earnings per share estimates after the closing bell on March 1, 2023. The cloud-based customer relationship software company held its 200-day simple moving average on February 24, 2023 at $160.10 on March 2. The open on the day was $193.12, a gain of 15.3%. If you bought Open, you had a 3.3% daily loss. This is a warning that buying a gap open does not mean daily profit.

Salesforce focuses on artificial intelligence software across cloud, mobile, and social platforms. The stock is not cheap. Its P/E ratio is 69.88% and it doesn’t offer a dividend, according to Macrotrends. The company has beaten earnings per share estimates for twenty-four straight quarters.

The daily chart for Salesforce

Courtesy of Refinitiv XENITH

The daily chart shows that Salesforce has been under the death cross for more than a year. This happened as the 50-day simple moving average is below the 200-day simple moving average.

The stock hit its 52-week low of $126.60 on Dec. 21, and that day proved to be a key positive reversal. This came as the close of $130.30 was above the December 20 high of $129.99.

Salesforce shares closed above its 200-day simple moving average at $161.37 on Jan. 26 and traded as low as $178.84 on Feb. 2. It then fell back to its 200-day SMA at $160.33 on Feb. 24. The stock gaped above its quarterly pivot at $170.33 and traded to a March 2nd high of $193.91. The stock ended last week at $186.43.

The four horizontal lines from bottom to top are the monthly value level at $153.76, the quarterly pivot at $170.33, and the semi-annual and annual risk levels at $215.46 and $227.48.

The weekly chart for Salesforce

Courtesy of Refinitiv XENITH

The weekly chart for Salesforce is positive as the stock trades well above its modified five-week moving average at $163.87. The stock is below its 200-week simple moving average or “return to mean” at $196.92. The 12x3x3 weekly slow stochastic reading rises at 73.49 on a 00.00 10 100.00 scale, with a reading above 80.00 being overbought and below 20.00 being oversold.

Trading strategy: Buy Salesforce on weakness to its quarterly pivot at $170.33. Reduce your strength holdings to the 200 week simple moving average or ‘revert to mean’ at $196.92.

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