Salesforce.com (NYSE:CRM) — This enterprise cloud-computing software company made a high of over $160 in July, but has since accumulated heavy selling. A “horn” or “broadening top” has been forming for more than a year, and on Friday, the stock plunged over $12 following a nasty Q3 financial report.
The “horn” is an unusual but highly accurate formation most often seen at market tops, according to Technical Analysis of Stock Trends by Edwards and Magee. Note the very high volume and gap down on Friday.
But be cautious. After a strong day of selling on very bad news, this stock could have a dead-cat bounce. Sell into an attempt to rebound to the gap at over $120 or a break of the support line at about $105. The chances are high that this stock will continue to break lower with a downside trading objective of $80.