Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Technical Analysis - Microsoft

By

PrintPRINT

Note: the following analysis is formulated as an assimilation of Fibonacci, DeMark, Elliott Wave and other technical indicators. It is offered as education and not intended as advice in any way.

Summary:



Microsoft (MSFT:NASD) has been much in the news lately owing to a combination of speculation about positive news announcements (regarding a possible dividend) as well as the fact that the stock has "finally" started to outperform the Nasdaq index.

Given the near universal belief that MSFT is about to "break out" of the near 3 ½ year trading range it has been stuck in, we thought the time was ripe to analyze the stock with the technical indicators we employ.

Net/net: the case for a sustained breakout is weak and the probability that MSFT pushes significantly beyond the $30 level remains limited. A better case can be made that the single impulse wave that started in December 1999 and ended in December 2000 has yet to resolve itself in a complete corrective move off the 1999 peak: a three-wave structure.

The most salient technical observations we can make are these: (1) the price structure from the December 2000 lows to present is highly overlapped and consistently shows a 3-wave structure in each of its legs, (2) momentum has been declining progressively since the 12/2000 lows with the MACD line asymptotically approaching the 0 line and (3) the latest momentum profile is showing lower momentum (a momentum divergence) than both previous swing peaks in September 2003 and November 2002.

These observations, along with the 2 most probable Elliott wave interpretations, suggest that the $30 level should be critical resistance. And though a move over $30 would be a surprise (owing to the most likely wave count), a move past $31.50 would be ever more improbable (owing to the second most likely wave count).

The very near term shows a clear 3 wave pattern off the lows in March, tracing out an A (3/22 lows to 4/22 high), B (4/22 high to 5/17 low), and, from that 5/17 low, a current potential C wave. Equality for the C wave (that is, where the C wave would be equal to the size of the A wave) comes between $29.10 - $29.20.

Hourly momentum is confirming the latest strength so I do not believe a top has yet been registered if our bearish interpretation is correct. Another down-up sequence into the $29-$30 area that shows hourly non-confirmation of new price highs and hourly Demark trend exhaustion indicators would be a strong signal that prices may be ready to turn.

The $29-$30 area appears to be formidable resistance that should prove difficult to pierce. A move through $30.01 would alter the technical view which would appear to suggest that a move lower from such resistance is likely. The conservative approach would suggest waiting for a confirmation of a trend change via a small degree impulse wave down from the $29-30 area before taking action.


No positions in stocks mentioned.

The informatio= n on this website solely reflects the analysis of or opinion about the perf= ormance of securities and financial markets by the writers whose articles a= ppear on the site. The views expressed by the writers are not necessarily t= he views of Minyanville Media, Inc. or members of its management. Nothing c= ontained on the website is intended to constitute a recommendation or advic= e addressed to an individual investor or category of investors to purchase,= sell or hold any security, or to take any action with respect to the prosp= ective movement of the securities markets or to solicit the purchase or sal= e of any security. Any investment decisions must be made by the reader eith= er individually or in consultation with his or her investment professional.= Minyanville writers and staff may trade or hold positions in securities th= at are discussed in articles appearing on the website. Writers of articles = are required to disclose whether they have a position in any stock or fund = discussed in an article, but are not permitted to disclose the size or dire= ction of the position. Nothing on this website is intended to solicit busin= ess of any kind for a writer's business or fund. Minyanville management= and staff as well as contributing writers will not respond to emails or ot= her communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.<= /p>

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE