So if you’re wondering to yourself, “Should I buy CRM stock?” there is certainly a technical case to be made, but make sure you take some precautions to prepare for the volatility.
If you’re looking at the stock as a long-term buy-and-hold, be prepared for these kinds of quick bursts followed by retracements of about 10%. As Barton said, and as the accompanying chart attests, 10% retracements are standard fare with CRM stock.
Those 10% retracements are most important to watch if you have a short time horizon for your CRM investment.
So you can play CRM stock right now on the momentum. Look to target about 10% on the upside. If it falls back to the 10% retracement levels of around $65, that’s when you’ll want to get out.
“If it trades back there with all the good news that it’s had, I wouldn’t want to be hanging around,” Barton said.
Long term, CRM stock has a strong upward bias. The added allure of Salesforce as a takeover target will help support that.
Just know that CRM stock will see volatility in weeks and months to come. So you’ll want to apply a standard 25% trailing stop to CRM stock to get out of there if trouble and Benioff’s skeptics do somehow prevail.
Bottom Line: Salesforce is certainly an exciting company, and Benioff’s efforts to bring an “end” to software are laudable. But with such big promises, CRM stock is still going to see volatility in the months ahead. That’s why you’ll want to make sure you take some precautions with trailing stops in the long term, while monitoring key retracement levels if you’re looking to ride momentum to a short-term pop.
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