PPR - CRM Flashed a Pocket into Earnings

Published : November 19 2010 at 9:40 ET

A handful of VoSI members saw this one, as we did, and we thought it was worth a comment at least as an example of a pocket pivot going into earnings in Salesforce.com (CRM), which we discussed as a stock, along with VMW, to watch for possible pocket pivots, in our original email report of November 2nd. CRM flashed a pocket pivot yesterday, although volume on the daily chart below is exaggerated because it includes volume traded after the close. We know, however, from closing checks that the volume did indeed qualify as a pocket pivot volume signature. The move has a slight straight-down and straight-up sort of look to it, and in this environment where the model is on a sell signal, we decided not to comment on this.

With earnings out, the stock is now a  buyable gap-up once it establishes an intra-day low in here some time off the opening, and currently pre-open it looks to be opening in the yellow highlighted area on the chart. This is a breakout from a base as well, and the opening price is well within 5% of the standard new-high base-breakout pivot buy point at 123.77, although we would use the top of this little "handle" area at around 120 as the base breakout buy point. The question is whether one would buy it here given the model's current signal. Risk-oriented traders who want to trade on the off chance that the market finds its feet here, which it certainly could, can always take their shots. Just keep your stops in mind. Remember, you can take any shots you want, because you always miss 100% of the shots you don't take, as long as you have an "out point," e.g., a well-considered and immedaite stop!

We don't own this thing, and we're not sure we would be buying here, although we could be an hour from now, but it's definitely worth watching on the open from our perspective.

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