Hosted his first executive decision segment of “Mad Money” on Tuesday Jim Cramer spoke to Marc Benioff, Chairman and CEO of Salesforce.com ((CRM) to learn more about his company’s proposed acquisition of Slack Technologies (JOB).
Benioff said the Slack acquisition “changes everything”. According to Benioff, companies are changing the way they work and are quickly adapting to their employees who work from anywhere. The closer integration of Slack with Salesforce makes connecting with customers and employees even easier.
Let’s look at the charts from Salesforce, part of Cramer’s Action alerts PLUS charitable foundation.
In this daily bar chart from CRM below, we can see that prices struggled to resume their uptrend after spike in late August. Prices have traded sideways to lower for the past three months. Prices trade below the flat line of the 50-day moving average but above the rising line of the 200-day moving average. Trading volume has been relatively low since the end of August, but we have seen an increase in sales lately as prices fell in late November.
The on-balance volume line (OBV) has been moving sideways since late August, showing that CRM sellers were a little more aggressive than buyers. The trend following MACD (Moving Average Convergence Divergence) oscillator has hit zero lately, indicating that this stock is barely showing any trending strength.
In this weekly bar chart from CRM, we see a mixed picture below. Prices are still in a longer term uptrend above the rising line of the 40 week moving average, but the weekly OBV line has been showing weakness for the past three months and the MACD oscillator is in take profit sell mode. This doesn’t look like it could support a new rally yet.
In this daily point and figure diagram from CRM below, we can see that the software is forecasting a potential downside target in the range of $ 204.
Conclusion strategy: Buying Slack might be a good strategic move for CRM, but in the short term, the stock price seems vulnerable to a decline. Stay away from the long side as we could see a dip in the $ 210-195 area in the coming weeks. This potential decline could turn out to be a buying opportunity.
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