Stock Of The Day: Is This The Bottom For Salesforce?

Salesforce, Inc. (NYSE:CRM) shares are trading lower on Tuesday. Over the past two weeks, they have lost more than 15% of their value.

But the selloff may end soon. This is why Salesforce is the Stock of the Day.

As you can see on the chart, Salesforce has dropped to levels around $225. This price was support in August and November.

There tends to be support at former support levels because of remorseful or regretful sellers.

Some of the people who sold shares around $225 in August regretted doing so when the price rallied afterward. Many of them decided that if and when they could eventually do so, they would buy their shares back at the same price they were sold for.

As a result, when Salesforce dropped back to around $225 in November, these remorseful sellers placed buy orders. There were so many of them that it created support at the level again.

Now that the stock has returned to $225, and disappointed traders and investors who sold around this level in November will be placing buy orders. If there are enough of them, it will create support at the level again.

You can also see on the chart that the last two times Salesforce found this support, a rally followed.

Stocks rally off support when some of the buyers who created the support become anxious and impatient. They know the sellers will go to whoever is willing to pay the highest price.

So, they increase their bid prices. Other anxious and impatient sellers see this and do the same thing. This could result in a snowball effect or bidding war that can force the shares into an uptrend.

This is what happen with Salesforce the last two times it dropped to $225, and it may be about to happen again.

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