Slight Profit Taking...

The second week of every trading month usually starts weak and with some profit taking like this. The first week of every trading month is packed with so much important economic releases and excitment that the second week usually starts by taking some of that profit away. So, what are we looking forward to this week? The PPI of course. The only heavy weight release for the week. ( please see http://www.mastersoequity.com/option_trader_hq.php for economic calendar) For now, the Dow continue to trade sideways in a very tight channel around recent highs, with short term overbought sentiments digested quite nicely. It does seem like there are just slightly more upside to come, probably pricing in the PPI results for the week, before the Dow over extends on a weekly time frame, inceasing the probability of a pullback to the weekly 30MA again.

Microsoft Shares (MSFT) Reaching A Bottom?

MSFT $27.83, +1.02%

Its certainly been a while since I last analysed MSFT. Now that I looked at it again, I see that it had been swept by the merciless correction wave since the last time I suggested that it has begun and completed a turnaround. Indeed, every stock is but a boat on the stock market ocean. Although the boat itself may have indicated an intention, the ocean can still move the boat along with it when a storm comes. MSFT has since fell to near the 200MA which I mentioned before to be the last line of defence for MSFT. I do see a glimpse of hope today as selling volume begins to dry up as a small reversal occurs. It seems as though MSFT, along with the market, has found some kind of support or bottom even though there still is some distance to its 200MA. If MSFT rallies today on high volume, it may indicate the beginning of another rally for MSFT. Let's watch and see.



MSFT Technical Chart By Worden Brothers TC2007 Charting Software
Voted Best Software By Readers Of Stocks & Commodity Magazine Since 1993!

Microsoft Shares (MSFT) Stages Strongest Rally Since 11 Jan!

MSFT $29.35, +1.80

MSFT rallies after my report on its "Selling Climax" 2 days ago! In fact, it staged the greatest single day rally since 11 Jan 2007 despite being involved in yet another patent war. This time against AT&T for use of their digital speech coder in Windows overseas.

Despite all that, the technicals look simply beautiful! Short term MACD continues to climb in upside momentum and short term stochastics continued up following a "kink". A "Kink" in short term stochastics always mean more upside to come. Volume is also on the rise, supporting the rally. 5MA also crossed 10MA for the first time since this correction begun. All technical indications are shouting "Hooray!" and it will not be surprising to see swing traders begin to accumulate at this point. My sentiment remains Bullish.


MSFT Technical Chart By Worden Brothers TC2007 Charting Software
Voted Best Software By Readers Of Stocks & Commodity Magazine Since 1993!

Microsoft Shares (MSFT) Goes Into Selling Climax

MSFT $28.74, -2.44%

What a surprise with MSFT last Friday. :) It was a nasty but interesting surprise.

All over the news wires, analysts are attributing the 2.44% drop to nasty Vista comments. But, is this the first time we are hearing nasty comments about VISTA?? Vista has been the center of controversy, nasty comments, hacks and security problems since the very first day... did all these comments finally accumulate into a 2.44% dropp on Friday? I don't think so.

Looking at the technical charts tell us a more intelligent tale. MSFT ditched on a huge volume surge indicating what we call a "Selling Climax". A selling climax suggests a last ditch effort by the bears to bring prices down. Such a selling climax indicates that the bears are expended and ready for the bulls to take over. Similarly, such a volume surge at a peak indicates a "Buying Climax" where the bears are ready to take over. A recent example is a "Buying Climax" on 12 Jan 07 leading to a correction in MSFT that lasted till now. I continue to see MSFT as Bullish. :)



MSFT Technical Chart By Worden Brothers TC2007 Charting Software
Voted Best Software By Readers Of Stocks & Commodity Magazine Since 1993!

Microsoft Shares (MSFT) Completes Turnaround!

MSFT $29.46, +0.20%

Microsoft Shares (MSFT) behaved as I hope to today as it continued a 3rd day of gain on growing volume. My complaint about MSFT's invert hammer formation was that it was not supported with a strong volume surge, however, MSFT's price action today formed a Hammer candlestick formation (not an Inverted Hammer) on higher than average volume. A Hammer formation is formed when prices closed near the high of a large intraday range. This suggests that the bulls were strong enough to take over by the end of the day to close prices higher eventhough there were significant selling pressure bringing prices to intraday low. This is an extremely bullish candlestick signal when supported by a significant volume surge... like the one we saw today. This move tells me that the MSFT rally is confirmed and we can expect more upside to come.

All short term momentum indicators showed that there are more headroom to go with growing strength to upside. For now, I am BULLISH on MSFT and see an immediate resistance level at $30.00, which is the 30 days simple moving average which used to be its support level. A high volume break above that level would certainly ensure more upside to go.


MSFT Technical Chart By Worden Brothers TC2007 Charting Software
Voted Best Software By Readers Of Stocks & Commodity Magazine Since 1993!

Microsoft Shares (MSFT) Ends Correction On Schedule!

MSFT $29.40. +1.34%

Well well, MSFT is on time on schedule this time round isn't it? :)

Its turnaround was completed yesterday as MSFT gains 1.34%. Short term stochastics and RSI along with MACD unanimously indicated upside momentum. There is just something I do not like about this "turnaround"... It did not happen on the strong volume that I typically see associated with a full scale turnaround. In fact, the candlestick signal that was formed was again an inverted hammer. The difference about this inverted hammer and the one that we saw on 8 Feb 07 was that the first inverted hammer showed that there are buying interest in a stock and when supported by the right technical indications will mean that a decline is coming to an end. This inverted hammer showed that buying interest was beaten down by the end of the day on relatively low volume. This suggests that buying interest is still shaky and that this turnaround may not be real. This gain may be due to the effects of the optimism and rally in the market yesterday and not something related to MSFT in particular. I would love to see a follow up today with strong volume before I conclude that MSFT's second rally has started. For now, I remain neutral on MSFT.

MSFT Technical Chart By Worden Brothers TC2007 Charting Software
Voted Best Software By Readers Of Stocks & Commodity Magazine Since 1993!

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) Goes Marching On...

MSFT $28.94, -0.14%

Microsoft shares (MSFT) goes marching on southwards with yet another lower low and lower high. Today, MSFT's chart displayed a typical candlestick continuation pattern where a day of significant drop is followed by a couple of days of smaller drops. We saw the same pattern back on 6 Feb 07. This pattern usually mean more downside coming up, however, we see some exceptions today. Unlike the continuation pattern on 6 Feb 06, MSFT's short term MACD indicated a loss of downside momentum along with a drop in volume versus yesterday. This tells me that there is a lack of followup to the drop yesterday and that this correction is not supported by mass concensus. Such a trend may not last very long. A strong correction that really cause damage and concern must be backed up by the kind of strong volume that we saw back in the May 2006 correction.

Every analyst in the world today is calling for a buy on MSFT and shouting out that MSFT is "On Sale". That served to breed bullishness and further eliminate bearish sentiments in the markets.

With a loss of downside momentum and a shaky level of participation to downside, I would say that the $28.00 support level is going to be a strong one. In fact, I will not be surprised if MSFT starts to turn before that level is reached. For now, I remain Bearish on MSFT.

MSFT Technical Chart By Worden Brothers TC2007 Charting Software
Voted Best Software By Readers Of Stocks & Commodity Magazine Since 1993!

Microsoft Shares (MSFT) Slipped Below 100 Days Moving Average...

MSFT $28.98, -0.96%

Microsoft shares (MSFT) slipped below its 100 days moving average last Friday to close $28.98 after showing an inverted hammer candlestick signal. It not only broke a fairly important level but also did it on a volume surge. Yes, MSFT's trading volume was at 3 days high last Friday when the bellwether stock ditched further down. So, what does a break on high volume mean? Yes, more downside to come. As I have mentioned yesterday, if MSFT slips below its 100 days moving average, we could be seeing a testing of the 200 days moving average next. Currently, the 200 days MA stands at the $26.50 level. Certainly looks like a long way down, doesn't it? However, opening up the time scale, we see that the $28.00 level used to be a strong resistance level for MSFT. Such a resistance level, usually serves also as a strong support level. Now that the swing traders and trend traders have jumped onto this bearish wagon and has brought MSFT lower on rising volume, a testing of the $28.00 will be inevitable. Let's see how the stock behaves at that level. For now, I remain short term bearish on MSFT but I continue to maintain a long term bullish outlook for MSFT with $33 as my immediate price target.




MSFT Technical Chart By Worden Brothers TC2007 Charting Software
Voted Best Software By Readers Of Stocks & Commodity Magazine Since 1993!