• (CRM) soared on Wednesday morning, trading 9% higher after posting earnings that beat Wall Street expectations.
  • Our view is that it is likely to trade into its resistance zone, followed by a period of decline.

The cloud software company reported earnings per share of $0.61 and total revenue of $3.39 billion, above analyst estimates of $0.50 and $3.37 billion. For Q4 and FY19, management’s forecast for earnings and revenue beat analyst estimates.

A beaming Marc Benioff exclaimed, “That was fabulous third quarter. It was all about the cloud, artificial intelligence, machine learning, and deep learning.”

Our analysis is based on the stock’s market cycles. Viewed as such, CRM has now begun the rising phase of its current cycle, which is timely based on our work. Yet the previous cycle fell below the point from which it started, which indicates a new negative trend is now in place.

Given this, CRM is likely to fail at the resistance zone between $137-$142. In that zone, we believe the stock is a good sell, with likely further declines into early 2019.

For more from Slim, or to learn about cycle analysis, check out the askSlim Market Week show every Friday on our YouTube channel.