On Slippery Slope

Software firm Inc (CRM) may ring a bell to many a trend follower.  Back in 2009 and 2010 period the stock quickly became a trend followers’ favorite as it hardly could do anything wrong.  Finally towards the end of 2010 the stock took its slope vertical with a large gap up, which proved to be too good of a thing and ultimately led the stock into a much choppier period.  While a marginal relative high was achieved in mid 2011, the stock ultimately retraced around 50% of the entire late 2008 – mid 2011 rally by the end of 2011.  From there the stock again worked its way higher in a textbook fashion for those focusing on Fibonacci retracement levels.

In December 2012 Inc (CRM), among many other stocks I might add, broke past a key multi-year resistance area around the $161 mark and didn’t find a top until early March of this year.

Since the March top the stock has worked its way lower in an orderly fashion and in early April retested the former resistance level at $161, which now acts as support.  Ever the past eight or so trading sessions Inc (CRM) has been developing a so called bear flag formation which as the the name indicates, usually resolves to the downside.  A break below $164 just might have enough momentum to push the stock through the key $161 support area and towards the stock’s 200 day simple moving average, currently near $157.

Those long the stock may want to be aware of the above discussed patterns in play while more active traders may consider a short-side swing on a break below $164




Watch More:

Leave a Reply

Your email address will not be published. Required fields are marked *