Salesforce.com stock plunges as traders aim to takeout stop loss orders. That is to say Wall Street traders a likely targeting the stop hunting zone identified below.
Back on January 6, 2021 I posted an article about the stop hunting zone on Salesforce.com stock chart. Surprisingly, CRM managed to stage a rally to $250, but then failed dramatically. Without a doubt the rising 10 year US treasury yield is to blame.
Regardless, traders see an opportunity to take advantage of stop loss orders. Certainly, this practice of stop loss hunting is commonplace on Wall Street. So, as an investor you had better understand the set up and what not to do.
In view of the technical analysis setup you should expect the following:
- Traders to trip stop loss orders below the market causing price to fall to at least $200
- Then a quick rebound and a retest of $215.
Surely, this outcome assumes the general market stabilizes. And the 10 year US treasury yield does not continue to rise.
Conclusion
To summarize, expect Salesforce.com stock to be volatile in the short term. In fact, if you are looking to pick up shares you could be in luck and get an attractive entry point. On the other hand, those with stop loss order below the market could be in for a rude awakening. In any event, keep in mind the general market appears to be in a correction mode, so be careful.
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