Salesforce.com (CRM) is expected to beat on top and bottom lines when the company reports earnings after the close Tuesday. The stock broke through its 2015 high in April, and continued on trend, moving up to the $92 area and booking a 35% gain in the first half of the year.
Since then, it has made a series of higher lows under the $92 resistance level, forming a rising triangle pattern. Resistance is being retested again in today’s session and if it is broken and holds after the report is released, Salesforce shares should be headed toward the $100 level.
The daily chart shows the rally in the first half of the year, and then the consolidation phase that followed and formed the triangle pattern. Moving average convergence/divergence has been tracking lower reflecting the loss in positive price momentum, but it has made a bullish crossover and looks ready to break above a downtrend line. The relative strength index is flat but above its 21-period average and centerline.
Investor confidence in the stock is evident by the positive money flow readings. Accumulation/distribution has remained above its rising signal average and Chaikin money flow is well into positive territory. The Chandre Trend Meter uses multiple indicators over six different Investor confidence in the stock is evident by the positive money flow readings. Accumulation/distribution has remained above its rising signal average and Chaikin money flow is well into positive territory. The Chandre Trend Meter uses multiple indicators over six different time frames and assigns a single number to a stock to determine trend strength. It is currently above the 90 level, suggesting CRM is still in a strong uptrend.
A triangle pattern breakout projects an upside price objective which is measured by taking the height of the triangle and adding it to the resistance level. It targets the $99 area, but as is often the case, as a stock nears the $100 level, the magnetic-like pull of a large round number takes over.
CRM is a buy after a post earnings confirmed break above $92 triangle resistance using a trailing percentage stop, and a $100 target price.
(This article was published on TheStreet.com on August 22.)
(This article appeared on RealMoneyPro on August 21)
The S&P 500 index has outperformed the VanEck Vectors Russia ETF (RSX) by over 13% year to date, but that dynamic may be about to change in a big way. Political tensions at home and abroad have pressured our markets, but the RSX is preparing for a volatile breakout from a two-month consolidation pattern, which could take it to a new two-year high.
The fund went through a previous period of consolidation between March and June this year, making a series higher lows and lower highs and forming the large symmetrical triangle on the daily chart. A breakout or breakdown from this type of pattern projects a target price measured by taking the widest part of the triangle and either adding it from the point of the breakout or subtracting it from the point of the breakdown. In this case, the stock broke down and touched the target low in the $18 area in just three weeks. That low would turn out to be the bottom of a cup-and-handle consolidation that immediately followed the triangle pattern and established rim line resistance at the $20.40 level. This level is being retested and the technical indications are suggesting a breakout is imminent.
Daily moving average convergence/divergence is overlaid on a weekly histogram of the oscillator and is above its centerlines on both timeframes, reflecting improving price momentum and short-term trend direction. The accumulation/distribution line crossed above its 21-period average and is tracking higher, while Chaikin money flow is well into positive territory. These readings reflect recent buying interest in the fund, although overall volume will have to improve to support a breakout.
Bollinger bandwidth has contracted to a level not seen since before the February breakdown and suggests a breakout from the cup-and-handle formation could be equally as volatile. We saw a large bullish engulfing candle in Friday’s broad market selloff, closing above its 200-day moving average and just below the pattern rim line.
The RSX is a buy after an upper candle close above the $20.40 rim line resistance level using a trailing protective stop.
(This article was published on TheStreet.com on August 21)
Shares of Infosys Technologies (INFY) dropped 13% in Friday’s session after CEO Vishal Sikka resigned amidst continuing criticism of his stewardship and compensation from company founders. The drop took the stock price down to test its 200-day moving average and the support line of a rising channel pattern it had been trading in for the last nine months. A massive spike in volume, more than 400% greater than the 50-day moving average of volume, powered the decline, and suggests institutional level distribution.
When a stock makes a strong percentage move in price, it’s a good idea to put it in technical perspective by using weekly charts. The weekly chart of Infosys shows the stock rally up off its 2013 low to its 2016 high in a large rising channel pattern. It moved below its 40 week moving average in July last year and then broke through channel support, continuing lower into year end. The 38% retracement level of the three-year rally range supplied support in the $13.60 area, which was also the diagonal channel pattern price projection.
The stock then began forming a smaller fractal version of the previous rising channel pattern and Friday’s sharp pullback took it back down to test that channel support. The relative strength index has crossed below its 21-period moving average and centerline, reflecting the sharp reversal in the direction of momentum, and the accumulation/distribution line and Chaikin money flow have crossed below their signal averages, reflecting negative money flow. The Bollinger bandwidth reading is an indication of contraction in the bands that often is followed by rapid expansions, and suggests there’s further volatility ahead.
A breakdown from the smaller channel pattern seems likely at this point, and it projects a target objective in the zone of support identified by the long-term uptrend line and the 38% Fibonacci retracement level, in the $13.75 level to the $13.50 area. This would be another move similar to the one in Friday’s session of approximately 7% more to the downside.
(This article was published on TheStreet.com yesterday afternoon.)
Department-store sales fell again in the latest quarter, though they were better than analysts’ expectations: Macy’s (M) is down 13% and Kohl’s (KSS) is down 10% after reporting before the open Thursday. J.C. Penney (JCP) reports next — before the bell Friday. The chart hints at what investors should expect.
Kohl’s has been the best performing of the big three brick-and-mortar stores, up 7.5% over the last year, with Macy’s and J.C. Penney down 35% and 46%, respectively, in that time. But even Kohl’s the better performer over time has not been immune to today’s sector downdraft, and that does not speak well for JCP in Friday’s session.
The sharp decline in JCP stabilized in May and June with the stock trading in a narrow horizontal channel. It looked like it had formed a base in mid-July after it broke above its 50-day moving average and channel resistance in the $5.00 area, but was unable to capitalize on the move with any significant follow-through strength. This week it began to retreat and, with today’s sympathetic price action, has moved back below previous levels to channel resistance-turned-support and below the 50 day average.
The decline has been accompanied by above-average volume and the Chaikin oscillator, a 3-period and 10-period average of the accumulation/distribution line, is crossing below its centerline suggesting selling pressure. The next level of support on the chart is the channel bottom at the $4.25 level; it is likely that level will be tested Friday, baring a much better-than-expected earnings report. The question is: Will this level hold, or will the stock make a new all-time low?
Even the mighty NVIDIA (NVDA) was not able to withstand the thrashing in the tech sector today and the share price dropped more than 4% in the session. There were, however, technical indications leading up to today’s drop that suggested a pullback was in the cards.
The daily chart shows the stock beginning the year by consolidating in a three month triangle pattern before breaking out in May and continuing its long-term trend higher. In June it began trading in a rising triangle pattern characterized by converging trend lines. It broke below the rising triangle support line today and closed near the low of the session, forming a large bearish engulfing candle. Some of the early warning signs were moving average convergence/divergence making a lower high last month in bearish divergence to price, and Chaikin money flow crossing below its 21 period signal average. The Bollinger bandwidth reading is at a level that suggests further volatility and momentum and money flow indications suggest continued downside.
The first level of support is the $159 area which is currently intersecting with the rising 50 day moving average, and below that is the $140 level where the stock price found support from its June pullback.