While tech remains the best-performing sector this year, certain groups in it just haven't kept up. Cloud computing stocks, for example, have mostly sat out the surge by the broader sector.
One technical analyst says that's exactly where you can find one of the best stocks to buy.
"The cloud computing ETF SKYY has been underperforming the broader technology rally here," said Todd Gordon, TradingAnalysis.com founder, Tuesday on "Trading Nation." "But there's something in the charts here in [Salesforce] that could indicate that we could see a bit of a catch-up here."
Salesforce shares were slightly lower Wednesday. A day earlier, the stock briefly touched record highs set in April, and Gordon sees a chance for the cloud computing company to push past that resistance to set another all-time high in the next few months.
He is referring specifically to a new support level that has formed in Salesforce as the result of a recent downtrend. While the stock has been in an uptrend for the past five years, said Gordon, there was "some downtrend resistance" where the shares did see a swing down to around $155 from $165.
More recently in a weekly chart of Salesforce, there was a key breakout above that $155 level with a "big, strong weekly candle." While the stock has since pulled back to that resistance level, Gordon believes that $150 is Salesforce's new support level and the shares could bounce from there.
As a result, Gordon is eyeing a bullish call spread going into the company's next earnings report. He is buying the February monthly 160-strike calls and selling the February monthly 170-strike calls for $3.35.
This means that if Salesforce closes below $160 on Feb. 21 expiration, then Gordon would lose the $335 he spent on the trade. But if Salesforce closes above $170 on the expiration date, then Gordon could make $665.
Salesforce is up 15% this year.