Two Different Paths
We’re opening the week with two different views: a bullish recovery trade in enterprise software and an asymmetric bearish trade ahead of a retailer’s earnings report.
The retailer faces weaker discretionary spending, downward earnings revisions and a near-term test of its outlook.
Salesforce (CRM 0.00%↑) is our bullish trade for the week. Its software helps companies organize customer information, track sales opportunities, run marketing campaigns and manage service requests. Its AI tools help automate those workflows.
A Former Winner
Our June 17, 2024 alert used a bullish call spread in Salesforce. Here’s the original entry:
We closed that spread on August 29th after 73 calendar days, earning 166% on both net premium paid and original maximum risk, before fees.
Why We’re Bullish Again
Salesforce’s current contracted revenue backlog grew 14% year over year in the July quarter, including acquisitions. That growing customer demand supports our recovery thesis.
The stock is back in our preferred RSI range, and Friday’s Trend & Consolidation pass adds technical confirmation. We’re using a different options structure for this re-entry.
The first trade leaves room for a recovery over several months. The second focuses on this week’s earnings and the stock’s response. Paid subscribers will find our new Salesforce trade, the bearish company and both exit plans below.
New to our alerts? Start here for an overview of our approach:
Today’s Former-Winner Trade
Theme: Contracted revenue supports a recovery.
RSI: 56; Chartmill Technical Rating: 9; Setup Rating: 8; Fundamental Rating: 6.
