Microsoft Shares (MSFT) Breaks 8 Days Losing Spree!
MSFT $29.01, +0.24%
Microsoft shares (MSFT) broke an 8 days losing spree at last with a small up day. I mentioned yesterday that MSFT may start to turn sooner than we expected and probably before it hits the $28.00 support level. Does it look like it is happening already?
Does this mean that MSFT is going to stage a rally from this point onwards? Well, it might, but it is still too early to tell. As technical analysts, we are like medical doctors. We look for syntoms and then look for further evidence before declaring an illness.
A small up day like this is again a common continuation pattern called the lowering steps formation. The pattern goes that a few days of small sideways or reverse movement usually follow a significant move before another significant move in the same direction occurs. There had been a lot of such examples and XEC on 27 Feb 2006 is one of such classical examples.
However, some thing about MSFT's movement tells me that something is different about MSFT's move. For a classic lowering stairs formation to work out, it should usually occur with the stochastics off the oversold position. That gives it the potential and room to move downwards further. In the case of MSFT, however, it is already in the deep short term oversold position with MACD clearly indicating a reversal to upside momentum from a very deep region too. Both Short term stochastics and RSI are also turning up for the first time since the drop begun 8 days ago. A reversal from such an oversold region is also a very strong syntom. Tomorrow is going to be critical for MSFT. If MSFT follows up with another up day on strong volume ( volume at least at 2 days high ), I would say that MSFT's correction is done.
For now, my sentiments (my sentiments are short term and more swing trading based by the way. My long term sentiment on MSFT has always been Bullish.) on MSFT upgrades to Neutral from Bearish.
MSFT Technical Chart By Worden Brothers TC2007 Charting Software
Voted Best Software By Readers Of Stocks & Commodity Magazine Since 1993!
Microsoft shares (MSFT) broke an 8 days losing spree at last with a small up day. I mentioned yesterday that MSFT may start to turn sooner than we expected and probably before it hits the $28.00 support level. Does it look like it is happening already?
Does this mean that MSFT is going to stage a rally from this point onwards? Well, it might, but it is still too early to tell. As technical analysts, we are like medical doctors. We look for syntoms and then look for further evidence before declaring an illness.
A small up day like this is again a common continuation pattern called the lowering steps formation. The pattern goes that a few days of small sideways or reverse movement usually follow a significant move before another significant move in the same direction occurs. There had been a lot of such examples and XEC on 27 Feb 2006 is one of such classical examples.
However, some thing about MSFT's movement tells me that something is different about MSFT's move. For a classic lowering stairs formation to work out, it should usually occur with the stochastics off the oversold position. That gives it the potential and room to move downwards further. In the case of MSFT, however, it is already in the deep short term oversold position with MACD clearly indicating a reversal to upside momentum from a very deep region too. Both Short term stochastics and RSI are also turning up for the first time since the drop begun 8 days ago. A reversal from such an oversold region is also a very strong syntom. Tomorrow is going to be critical for MSFT. If MSFT follows up with another up day on strong volume ( volume at least at 2 days high ), I would say that MSFT's correction is done.
For now, my sentiments (my sentiments are short term and more swing trading based by the way. My long term sentiment on MSFT has always been Bullish.) on MSFT upgrades to Neutral from Bearish.
MSFT Technical Chart By Worden Brothers TC2007 Charting Software
Voted Best Software By Readers Of Stocks & Commodity Magazine Since 1993!
Labels: microsoft, MSFT, msn, msn window, us market, vista, window, window vista, windows, windows vista
posted by Jason Ng at 6:59 PM
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