For today, I want to share with you an investing lesson related to stocks, using a case study of Salesforce $CRM.
Today, Salesforce was up 22%. That's a huge move. And it comes on the back of a 39% rally that started in June.
One of my readers is also a relative of mine who works for Salesforce. I remember back in December asking him, "What's wrong with Salesforce??"
This was tongue-in-cheek. We neither claim to be so clairvoyant that we know why a stock is struggling nor do we expect the market to make any sense.
Examine this price chart of $CRM:
This technical setup is quite unique, actually. We are looking at a gap island bottom. This is because price gapped down from $228 to $216 in January 2026 and today it gapped up from $205 to $230.
An island bottom is considered a reversal pattern, meaning that the downtrend that CRM has exhibited since 2024 may be changing.
Work by Thomas Bulkowski indicates that island reversals experience a partial or full gap filling about 65-70% of the time. This would occur if shares traded back below $230.
I'm unsurprised by this reversal and rally in CRM stock. I have been watching the distance from the 200d moving average and the change in RSI momentum which were both extreme and supportive earlier this summer.
But most importantly of all, my favorite data source FASTGraphs was showing opportunity. Let's dive in.
I put the red dot when I asked my pal "what's wrong with salesforce?" for reference. At the time, price had reached the FASTGraphs fair value level, as indicated by the orange line at 20.87x earnings. That was far below the mean valuation for the stock at 41.59x earnings.
It got worse from there.
The stock dropped to 10.7x earnings.
Throughout that period, and before, I was buying CRM as the technical and fundamental setup looked constructive. Here's a screenshot of my trades:
Why do I invest like this?
Because, as Warren Buffett says, "Price is what you pay, value is what you get."
I love buying great companies at a fair price. From over a decade of experience trying every trading strategy there is, what has worked for my portfolio is to find great companies selling for fair prices.
No one can predict the future.
But I don't need to predict the future to make investing decisions backed by solid data.
Disclaimer: this is for educational purposes only and is not investment advice.
