Markets have been rattled by a sharp three-week correction since February 19, with the Nasdaq bearing the brunt of the decline, dropping 14%. While corrections can be painful, they serve an important purpose —resetting valuations, bringing stocks back to more reasonable levels, and laying the foundation for the next bull run. Two weeks ago, I shared a trade set-up on QQQ , the ETF that closely tracks the Nasdaq’s price movement. In that post, I highlighted key signals to watch for the correction’s end. Looking at the same chart now, the MACD crossover I previously pointed out has occurred, signaling that the worst of the sell-off may be behind us and the market could be shifting toward a recovery. While many tech stocks are following a similar pattern, the stock I’ve selected for this trade is Salesforce (CRM) . Like the broader sector, CRM was caught in the sell-off, tumbling an eye-popping 26% in just 43 days. However, just like QQQ, CRM is now showing early signs of a turnaround. For this trade set-up, I’m relying on two key technical indicators: RSI (Relative Strength Index): When RSI falls below 30, it indicates oversold conditions, often leading traders to watch for a potential reversal. In CRM’s case, RSI dropped below 30 between Feb. 26 and March 12 before rebounding, suggesting that the stock may be in the early stages of a turnaround. MACD: Another reliable tool for spotting potential market reversals is the MACD (Moving Average Convergence Divergence) indicator. While the standard MACD settings (12,26,9) are commonly used, they often lag, generating signals after the market has already moved. To improve responsiveness, I’ve adjusted the settings to (5,13,5). A MACD crossover occurs when the blue MACD line crosses above the yellow signal line, signaling an early trend reversal—and that’s exactly what we’re seeing on CRM’s chart. The Trade Setup: To take a bullish trade on CRM, I’m implementing a bull call spread strategy. With CRM trading around $281, I’m structuring the trade by buying a $280 call and selling a $285 call as a single unit. If CRM closes at or above $285 by April 11th, this trade will yield a 100% return on the capital risked. This setup provides a way to capitalize on a potential bounce while maintaining a defined risk-reward structure. With 10 contracts, this equates to risking $2500 to potentially gain $2500. Here is my exact trade setup: Buy $280 call, April 11th expiry Sell $285 call, April 11th expiry Cost: $250 Potential Profit: $250 Setups like this are detailed extensively in my book, Mean Reversion Trading, available here: https://25k.link/book You can find more similar trade setups and analysis on my website . -Nishant Pant Founder: https://tradingextremes.com Author: Mean Reversion Trading Youtube, Twitter: @TheMeanTrader DISCLOSURES: (Nishant has a CRM 280-285 call spread expiring on 4/11/2025.) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
