Still Catching Non-Believers Off-Guard

Customer relationship management software provider (CRM) late last week announced its latest upbeat second quarter results, leading the stock to jump 12.55% on the day.

This trend follower cult stock has won many battles with short-sellers over the years as it continues to surprise on the upside, leading to short-squeezes and new long-only money piling into the stock.  For a little perspective let’s look at the stock’s longer-term chart before weighing the near-term risk-reward.

Once a rather overlooked stock as recently as late 2008, (CRM) has over the years turned into a an absolute favorite stock among the trader community.  This is particularly so as it continually rewards the buy-the-dip mentality that has once again gotten a good hold on investors over the past few years.  Unlike other cult stock such, most notably, Apple Inc (AAPL) during its first half 2012 vertical leaps, (CRM) has found a good rhythm of consolidating and retracing its rallies before continuing higher.  This does give the stock a better chance at continuing its up-trend without too catastrophic of a correction.  Note that with last week’s move the stock has reached a new all-time high and as well as the very upper end of its trading range (black lines).

crm multi year

On the closer-up daily chart of (CRM) we note that last Friday’s move higher was the result of a powerful gap-up and out of a bullish pennant formation.  The move was strong enough to gap the stock past the year to date highs, closing near the top end of the day’s range.  Such powerful moves are not to be faded by my book, although from a pure trading point of view I would now like to see some consolidation at these all time highs before playing the stock from the long side.

The bears have been dealt another devastating blow with last week’s rally, making the long-side of the stock attractive still, even if overbought in the immediate term.

crm daily








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