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Buy Salesforce share? - The analysis

The Salesforce share in the technical analysis taking into account an overall market assessment. Buy the Salesforce share now.

US stock market appears steadfastly stable

The recent price turmoil on the stock markets is associated with an exaggerated price increase. Without a doubt, the US stock market caused a rapid and sudden downward wave in early February. It is not yet entirely clear whether the downward movement was not caused by market manipulation. The US exchange regulator has received at least one notification that will lead to a more detailed investigation of what is happening. There is a suspicion that the mathematically calculated volatility index (VIX) was manipulated artificially (that is, without transactions). The VIX is considered an anxiety indicator, and its rise may have forced some computer programs to sell stocks.

Looking at the long-term uptrend, however, it quickly becomes apparent that the long-term uptrend channel on the S & P500 -Index is unbroken. It is therefore likely that most algorithms are still in long mode. Accordingly, the market participants would rather perceive a cheap long entry than set a new downward trend with further sales.

Image: Weekly chart of the S & P500 with RSI indicator

in the upper chart are two trend channels that were drawn using trend forks. Each trend fork forms a course channel based on three striking course points.

Both trend forks point upwards and are nested at the same time. This is a very strong trend pattern and confirms the power of the bulls. If the smaller trend fork (Pitchfork) is broken, the larger one will continue to prevent the shares from being sold. You can even create a worst case, because the middle line of the large trend fork acts as a psychological buffer. Accordingly, support between 2500 and 2600 points would be expected for the S & P500. Starting from the upward wave, this creates a correction between 38 and 50% (blue marking on the chart). In an upward trend, this is usually a good entry area. We can therefore assume that the general upward trend will continue until the beginning of summer.

Sentiment in the USA

The AAII (American Association of Individual Investors) conducts a monthly sentiment survey, the following Brought result. (02/21/2018)

Bullish 44.7% (-3.9% on the previous month)

Neutral 32.6 (+ 2.5% on the previous month)

Bearish 22.8% (+ 1.4% on the previous month) The AAII conducts this survey every month. To do this, market participants have to provide a forecast for the next six months.

The mood survey among investors is clear. The bulls are still in control. If you only look at the shares of bulls and bears (44.7% to 22.8%), the distribution even suggests an over-excited share of bulls. Specifically: If the stock market has to accept further price losses contrary to the presumption, then the reason is not that the market is generally weak but in the fact that the market would continue to be overbought in the short term.

Trend analysis of the largest Dow Jones companies

Short-term = trend analysis of the past 40 daysMid-term = trend analysis of the past 40 weeksLong-term = trend analysis of the past 40 months

Table: Dow Jones Mighty

In the upper The table shows the six largest companies in the Dow Jones Industrial by market capitalization. These companies are hugely important to assess the upside potential of the entire US stock market. In the table above, the trends from three different time frames (daily-weekly-monthly) are considered.

Assuming that each time level would be weighted equally, the result would be seven times long and five times short. The ratio is another indication of the assumption that the bulls are "one step ahead."

Buy Salesforce share? - The analysis

Buy Salesforce stock?

Salesforce is one of the companies that is growing rapidly and are rarely in the focus of the stock market. It is an international provider of services related to the computer cloud. The business idea originally came from Oracle. As a result, key Salesforce executives are former Oracle employees. At that time it was called "Software as a Service" and it is about software for customer relationship management (CRM). In essence, Salesforce offers enterprise applications over the Internet. This gives sales employees and field staff, for example, access to customer information. Salesforce thus occupies a market area that the company would like to fill with all its might. It is one of the fastest growing companies in the world. Over 20,000 employees generate sales of more than $ 8 billion. There is no end in sight to growth, because cloud computing is becoming increasingly important.

Enterprise software in the cloud is the future. Experts predict that in the coming years cloud software will grow five times faster than traditional software sales. The toughest competitors are Microsoft, Adobe, Oracle and SAP. However, there are a few confusions about the cloud sales. The analysts believe that Salesforce is currently the strongest competitor in the cloud market. However, IBM speaks of its own sales of $ 12 billion. Such inflated figures arise when management wants to push the share price with positive reports. You simply include other sales in the cloud sales. As is so often the case, it is a question of definition.

Image: Sales of cloud computing worldwide from 2009 to 2016 and forecast by 2020 (in billion US dollars) (Source Statista)

The top ones Figures show the forecast global growth. There is no discernible slowdown, and this puts Salesforce in a lucrative starting position that should also affect the share price.

Financial data from Salesforce

Years201420152016201720182019Revenues40715373666783911044112539Results before St.-357-21364,2825,3814911998KGV0003047961

Figures in million US dollars

Figures 2018 and 2019 are estimates. Source: finanzen.net

Salesforce is an ambitious company with a claim to market leadership. In a similar way to Amazon or Facebook, efforts are being made to put sales growth above company profits. The strategy is clear: Those who present themselves as top dogs in their stores early on will reap the big harvest later. The procedure can be recognized from the business figures. Sales have more than doubled in the past four years. Corporate profits were only in second place because they are still poorly developed. However, the cloud industry is very lucrative. Therefore, corporate profits should expand significantly in the next five years.

Technical starting point of Salesforce share

Image: Weekly chart of Salesforce share with stable volume trend

About the volume trend: The picture above shows a special chart that shows the quality of the trend. Both the course and the lower volume trend should have an optical green color. In this case, course and volume are in harmony. The respective highs and lows, according to the market technique, are in a bullish rhythm. Such trend patterns are extremely stable. As a result, the upward trend is likely to continue.

In a second chart, I will show you the technical situation in detail.

Image: Salesforce share with z White nested upward trends

Share in the acceleration phase

The share shows a larger and a smaller upward trend channel. Both are nested within one another, which usually leads to an acceleration of the upward trend. The RSI indicator is shown in the lower area. It indicates a resting phase when the 50 line is reached. In most trend movements, the center line is a rest phase and a precise starting point for another upward movement. In 2017 and 2018 there was no intersection with the 50s center line. As already described, strong trends reach the 50s line then reverse. In the current trend, the price even reverses before the 50 line. This is rare and indicates greedy buyers.

Salesforce shares: WKN: A0B87V on German stock exchanges or US symbol CRM in the USA

target price: 135, - US $

stop loss: US $ 92.50

stopover: US $ 120

trading strategy

if you are from want to benefit from the short-term stock recommendation, you can buy the stock directly or work with derivatives. Note that derivatives include leverage and therefore increase the profit and loss potential. In extreme cases, a total loss is even possible.

Trading information:

Stop loss: The stop loss is initially set as an initial stop and has the function of a maximum Loss limitation.

Price target: The price target is the exit point for the forecast market movement.

Interim target: When the intermediate target is reached, the position is in profit. At this point we take a partial profit and we sell 50% of our position. At the same time, the stop loss is adjusted to the personal entry price. This enables us to close our position without loss, even if the market later turns against us.

Buy Salesforce share? - The analysis

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