Here I want to discuss the current situation of Microsoft and attempt to diagnose its future direction.
Let me know how it goes for and how you view these recent movements
If this analysis helps, I'd really appreciate a like, it lets me know that what I'm doing is good work.
Microsoft is an integral part of the Tech Sector and thus the SP500 as a whole. Therefore, the direction it takes will be strongly intertwined with that of the entire market.
I recently discussed a potential Cup and Handle vs Double Top in the SP500 which can be seen in related ideas.
The outcomes of these scenarios will both determine and be determined by outcomes of Mega Caps like MSFT thus this analysis relies on particular scenarios in the market playing out.
Long:
Supporting the Cup and Handle scenario MSFT remains a solid defensive and growth Stock in a continually uncertain environment, with earnings reporting soon MSFT could be lifted by an expectation of a surprise to earnings.
Technically Speaking:
-It still remains in an upwards Parallel Channel
-Recent Selling has been of significantly lower volume than the prior downswing
-Short Interest Remains relatively low
-RSI remains above 50 and has much room to move up
-Momentum is decreasing slowly
-Price is yet to break strong Support of 50d MA
-Pre Market is above $215 Support which could act as a buying opportunity for investors who missed the recent rally.
Short:
In line with a Double Top scenario, Technology is, under normal circumstances, overvalued in terms of PE ratios. There is also a perceived risk due to a lack of stimulus and Anti-Trust rulings.
Technically Speaking:
-Bollinger Bands are stretching indicating higher volatility, with substantial upwards movement having less room than the downside, future selling could be indicated by recent profit-taking in anticipation of substantial downside volatility.
-In its recent rally MSFT failed to reach $225 thus making investors scared that further upside is too highly-priced.
-Momentum Decrease could move faster which would act as a signal that MSFT is not going higher at this point.
Verdict:
Undoubtedly the most important signals to use in your decision on MSFT is those that lie in the broader SP500. As discussed in my analysis on that Chart, 3412 on the SP500 is a vital support. We may reach this today and without significant support volume, the probability of downside substantially increases (especially with a move below 3400). To truly confirm further upside momentum a move above 3450 should be seen without further breaking of this support. If we may break 3400 movements down towards $210 and even $200 and further is possible.
For the individual equity on the long side, $215 should not be substantially broken today and high levels of bullish volume between $215 - $218 should be seen to confirm the Cup and Handle and to confirm that this recent drop has provided a buying opportunity and not a pause for profit-taking. Breaking strongly below $215 would bring us within the prior range of $202-$215 and thus volatility between these Resistance and Support levels will be seen.
Best of luck and Stay Disciplined
Let me know how it goes for and how you view these recent movements
If this analysis helps, I'd really appreciate a like, it lets me know that what I'm doing is good work.
Microsoft is an integral part of the Tech Sector and thus the SP500 as a whole. Therefore, the direction it takes will be strongly intertwined with that of the entire market.
I recently discussed a potential Cup and Handle vs Double Top in the SP500 which can be seen in related ideas.
The outcomes of these scenarios will both determine and be determined by outcomes of Mega Caps like MSFT thus this analysis relies on particular scenarios in the market playing out.
Long:
Supporting the Cup and Handle scenario MSFT remains a solid defensive and growth Stock in a continually uncertain environment, with earnings reporting soon MSFT could be lifted by an expectation of a surprise to earnings.
Technically Speaking:
-It still remains in an upwards Parallel Channel
-Recent Selling has been of significantly lower volume than the prior downswing
-Short Interest Remains relatively low
-RSI remains above 50 and has much room to move up
-Momentum is decreasing slowly
-Price is yet to break strong Support of 50d MA
-Pre Market is above $215 Support which could act as a buying opportunity for investors who missed the recent rally.
Short:
In line with a Double Top scenario, Technology is, under normal circumstances, overvalued in terms of PE ratios. There is also a perceived risk due to a lack of stimulus and Anti-Trust rulings.
Technically Speaking:
-Bollinger Bands are stretching indicating higher volatility, with substantial upwards movement having less room than the downside, future selling could be indicated by recent profit-taking in anticipation of substantial downside volatility.
-In its recent rally MSFT failed to reach $225 thus making investors scared that further upside is too highly-priced.
-Momentum Decrease could move faster which would act as a signal that MSFT is not going higher at this point.
Verdict:
Undoubtedly the most important signals to use in your decision on MSFT is those that lie in the broader SP500. As discussed in my analysis on that Chart, 3412 on the SP500 is a vital support. We may reach this today and without significant support volume, the probability of downside substantially increases (especially with a move below 3400). To truly confirm further upside momentum a move above 3450 should be seen without further breaking of this support. If we may break 3400 movements down towards $210 and even $200 and further is possible.
For the individual equity on the long side, $215 should not be substantially broken today and high levels of bullish volume between $215 - $218 should be seen to confirm the Cup and Handle and to confirm that this recent drop has provided a buying opportunity and not a pause for profit-taking. Breaking strongly below $215 would bring us within the prior range of $202-$215 and thus volatility between these Resistance and Support levels will be seen.
Best of luck and Stay Disciplined
