Microsoft - Is The Top Already In?

NASDAQ:MSFT   Microsoft Corp.
One of the key points to Microsoft is it is, in essence, a U.S. state-backed corporation, and one that is trading at more than $2.5 trillion market cap at present.

You're looking at a company that just set a new all time high while the overall market is not healthy and the macroeconomic fundamentals are actually bearish.

And so, we have to seriously ask ourselves if it's time to short God the top.

Microsoft's price action on the monthly is curious.

The price action is healthy and natural all the way from where it bounces to the top, and only becomes curiously strange when it gets to the top.

Why does a stock that bounces at the right place and forms a fully proper reversal pattern, which we see on the weekly:

Only sweep the All Time High?

Why doesn't it raid the ATH and run bigly larger like NVDIA did?

Well, the answer is actually quite clear when you overlay NVDA to MSFT:

In essence, NVDA at $480-450 is MSFT at $350. The difference in price action you see today is because NVDA was relatively weaker in the past, meaning MSFT was inordinately strong in the past.

Anything that reaches an extreme will reverse. If it reaches the extreme twice, it will reverse hard twice.

The geopolitical situation in the world is not healthy. There is a ton of sabre rattling between NATO and the Nation of China at the moment.

The western propaganda machine wants you to believe that Xi Jinping intends to invade Taiwan because he's very evil very super Mao Zedong++, but in reality it's more like the "International Rules Based Order" wants to use the fact that the Chinese Communist Party is rotten and unforgivable as a handle to depose Xi and have Taiwan invade the Mainland under the guise of international "aide".

Why this matters to you as a trader is because you're flirting with getting gapped down hard since Beijing daytime is New York night time.

If you want to be long right now you need to be hedged long volatility, or you're risking your life.

Moreover, Xi, in order to defend himself, his faction of Chinese nationalists, and China's 5,000 year history, can overthrow the CCP in a Gorbachev-style coup overnight, weaponizing the 24-year-long persecution and genocide of Falun Dafa by the faction belonging to former Chairman Jiang Zemin (it died this year).

The significance is major to traders because your beloved governments, banks, and corporations have stained their hands crimson flirting with the Jiang faction toadies in Shanghai (Babylon) in order to get all the benefits they desire.

Google the Neil Heywood story if you want to see a classic example of a British billionaire getting gibbed by the greatest evil of all time.

Much to do before the call's key points.

Before we continue, I examine the price action I expect to manifest in SPY (SPX Futures ETF) for the remainder of the month, which can serve as something of a compass for what lies ahead:

SPY - A Dip Is Coming. Maybe Buy It?

Back to MSFT:

  1. This is a very hard setup to trade
  2. Because the June high may have been a hard top, double and triple top or not (See TSLA July-September '22)
  3. Lower lows lower highs indicates the dip is hard to buy
  4. But the short may only take us to the $320 range.
  5. Sweeping $300 is the key to a bullish continuation above the highs
  6. Maintaining ~$280 is the key to continuing upwards at all.

Microsoft has a really notable catalyst in that its earnings are on July 25 postmarket, which means price action will manifest the morning of July 26, which just so happens to be when the next FOMC meeting is.

After July FOMC the next FOMC is deferred until September 20, 9 days short of quarter end, notable because of the notorious JPM Collar, which I discuss here:

SPX/ES - An Analysis Of The 'JPM Collar'

What I expect is we see a fairly violent correction on Microsoft back to the $300s before we can see any kind of further meaningful flirtation with a run over the $350 ATH.

But the June high may have been the top for the foreseeable future, as evidenced by the relationship between NVDA and MSFT.

Be careful. The time we have left for happy and normal days is so short you can almost count it on the fingers.

When things really emerge, Nasdaq 8,500 will be the least of your concerns, really.
Microsoft continues to trend downwards on Monday market open:

Which may or may not last today. But it does tell you the parabolic run has stoppped for now.
Microsoft feigning to do the higher lows thing.

Def wasn't pretending to double bottom. Question is, is this the top?

Microsoft is a sticky situation.

On the one hand a retrace back to the breakout point is a great continuation pattern for longs.

On the other, not respecting at least half of the gap up is bad for longs (See NVDIA post-earnings ATH.)

The breakout may simply be "Turtle Soup" and the top was shortable.

$365 may also really have been a top.
Microsoft has absolutely no luft and gave all of its gains back after the ATH.

An indication that the top really is in.

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