Hi everyone. Well, it’s been a while…
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Here’s today’s newsletter:
Microsoft Corp. (NASDAQ: MSFT)
MSFT has been in a long-term uptrend with higher highs and higher lows. Assuming the 0 Fib = 132.52 (COVID-19 lows) and 1 Fib = 349.67 (2021 ATHs), we arrive at extensions as follows: 1.618 Fib = 483.87, 2.618 Fib = 701.02, 3.618 Fib = 918.17, 4.236 Fib = 1,052.37…
MSFT has been consolidating in a pennant (in red) since July last year, having made a new high at 468.35. It has been forming short-term lower highs and higher lows. The weekly KDJ (basically Stochastic with a more sensitive “J” line) is forming a hidden bullish divergence.
On the daily, we can see the bullish pennant pattern a lot more clearly. Bullish divergence is also forming on the daily RSI. As long as we can hold 407 support, the likelihood of a move back towards the bearish earnings gap (422-440) is there. A breakout of the pennant will see a move back towards 455-456 and 467-468 imbalances, while a breakdown below 407 will most likely see a retest of extremely strong support at 390.68.
Sentiment on MSFT, despite the tailwinds in AI and their significant investment in capex for the year ahead, has been bearish as traders look to anticipate a top on the stock. However, in the past, we have seen stocks go on to retest their 1.618 Fib extension despite chart bearishness. Whether it is is a blow-off top or the start of a short-term pullback/correction, the upside case is there until MSFT hits 483.87 at the very least.
Call it a rounding top, double top or so on. However, it is difficult to call a top when the stock still has not broken key supports. I urge caution being bearish on MSFT in particular, as both intraday and overnight moves can be very volatile.
Big months ahead for MSFT. Will it continue to kill short-term speculators, or will it finally reward the degenerates looking to chase a substantial move to either the upside or downside? Let’s find out together!
$Microsoft(MSFT)$ $Apple(AAPL)$ $The Magnificent Seven ETF(MAGS)$ $NVIDIA(NVDA)$ $Meta Platforms, Inc.(META)$
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