PPR - Keep an eye on VMWare, Inc. (VMW) and Salesforce.com (CRM) for possible Pocket Pivots

Published : November 2 2010 at 20:20 ET

We note that both VMWare, Inc. (VMW) and Salesforce.com (CRM) have been building bases over the past few weeks, and both have started to make an attempt to come up the right side of possible cup consolidations. VMW, shown below, is sitting on top of its 10-day moving average as it remains very tight along the 10-day line. All we would need to see for a pocket pivot is an upside move from the 10-day moving average on volume that exceeds the 2,727,455 shares of down volume on October 26th, as we've highlighted on the chart.

CRM is acting somewhat better than VMW in that it is sitting on top of its 50-day moving average, as we see in the daily chart below, and is hugging the 50-day line here. CRM does announce earnings around the 17th of November, and it would be interesting to see CRM flash a pocket pivot buy point off of the 50-day moving average before announcing earnings. Next quarter's estimates look to ble strong at 31 cents a share, which equates to quarterly earnings growth of 93.75%. Look for a pocket pivot to occur anywhere in here along the 50-day line on volume that exceeds the 2,049,521 shares of down-volume that were traded on October 26th. CRM and VMW are both "big stocks" in the cloud-computing space, and their current consolidations could easily set the stock up for new highs. This would likely start with a pocket pivot buy point in here, in our view, which is why we bring them up.

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