Downside Risk For Microsoft Is Astronomical

NASDAQ:MSFT   Microsoft Corp.
MSFT is one of the only tech stocks that has made a significant higher high since the December 2018 selloff. I posted a short trade setup back then, suggesting that it would be unwise to short until the recent low was breached. Indeed, MSFT defied my original expectations and headed up, even breaking new highs. Due to this, it is one of the assets that is furthest away from its parabolic trendline on the linear chart. You can see Netflix very close to breaking down right now:

On the logarithmic chart for MSFT , we can see that it has held a parabolic trendline (purple) since its inception! That's CRAZY.

Here's where it is currently (right in the 118 area):

If the stock market continues its slide, I think we can expect Microsoft to at least test its own uptrend line again. If that breaks, I think it will likely enter free-fall mode. I have the opinion that most equities are not truly valued much above 2008 levels. This means that many could retrace the entirety of their gains from the last 10-15 years. The lowest bearish targets may not be reached, but they remain a distinct possibility, and I think investors should prepare for this scenario. If we do finally see some major breakdowns, I'd like to observe the market's reaction at higher support levels before blindly assuming further downside. Supports are outlined on the above chart.

This is not financial advice! Purely my opinion and should be only used for educational/entertainment purposes.

-Victor Cobra
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