The markets began to bounce back Wednesday from the selloff that started the week, but momentum stocks are still feeling the heat, specifically Salesforce.com.
Shares of the cloud computing company are down around 7 percent in the past three trading sessions, and have fallen more than 17 percent since hitting an all-time high on February 28.
So, will the skies clear up for Salesfoce.com, or is there more pain to come?
“I think this company, they’re dominating the space,” said David Seaburg of Cowen and Company. “They’re at the front end of basically all big data companies.”
According to Seaburg, there’s no reason to sweat the recent selloff. “I look at this stock in the low 50s. Remember the selloff we had in high growth, this stock got down to roughly 50 bucks per share and then it bounced. We’re basically around 54 and change,” he said. “I think this is a great level to look at the stock. It’s a much more shallow pullback, but it’s a less crowded trade than it was back when we saw that last growth selloff. I like it here.”
(Watch: Momentum buys)
But, based solely on the technicals, John Kosar of Asbury Research sees more downside for Salesforce.com.
The Salesforce.com chart shows potential downside to $51 per share.
Kosar’s main concern is the stocks inability to recover from a steep decline from the high in February to the low in April. “It looks to me for a near-term kind of a trade, I would wait for $51 [per share]. And if we break $51 [per share], we could end up back in the high 40s again. I would not buy them here.”
Check out the video above for the full discussion on Wednesday’s episode of CNBC’s “Street Signs.”
- Investment & Company Information