Mr Softy himself, Bill Gates, says he has over 60% of his wealth in the stock market. He pontificates that no other investment can provide a decent return so he recommends staying in the stock market. When they were playing a bridge card game, Warren Buffett's long term buy and hold philosophy must have infiltrated Gates' noggin. It will be interesting to see what Gates says about his fortune a couple years from now.
Gates no doubt owns lots of MSFT stock and it has been a stellar performer a rocket launch from the lower left to the upper right. The privileged class has made lots of money on this ticker. Alas, all good things come to an end. The rising wedge pattern is ominous since the collapses can be quite dramatic.
The red lines show negative divergence across all indicators in this monthly time frame so the top is in. The one caveat is the MACD line. It is trying to turn down as price tests the prior highs but the jury remains out. If the MACD still has a sliver of juice left in it and is still sloping up, a jog move is likely, down one month, then back up the next month for another test of the highs, then, as the MACD rolls over with neggie d during that price high, the top is in. This outcome would place the multi-month and multi-year top in October/November rather than now.
The ADX shows a strong trend higher in 2014 and 2015 but this petered out. Then Microsoft was goosed hard starting with the central banker stick save of markets in early 2016. The ADX verifies that the move higher in MSFT is a strong trend higher although the trend higher was stronger in the middle of last year than it is now. As Mr Softy is spanked lower during the weeks and months ahead, watch the ADX to see if it falls out of the pink box.
MSFT has violated the upper standard deviation band so the middle band at 111.86, and rising, is on the table, also the lower band at 80.67 and rising. The middle band is the 20 MA and note that price has not touched the 20 since 2016 over 3 years ago. That is uber long. Price will need to go down to show the 20 respect. Price is also extended above the moving averages and desperately needs a mean reversion lower.
Summing up the above, everything is bearish going forward for MSFT although that MACD line may be able to create another month or two of flattish buoyancy. If you made money in Microsoft, exit stage right. Let Gates hold the bag; he appears willing to do so.
A long-term player can begin entering MSFT on the short side now and add to the short each month forward. You will be happy at the end of this year and into Q1. It would not be surprising to see MSFT at 110-115 by year-end and even a lot lower like sub 100 in early 2020. Keystone does not have a position in MSFT currently. It is a momo stock so that has to be taken into consideration if contemplating a short.
The weekly chart topped out with neggie d at the end of July. Price took a tumble but now stumbles sideways on the weekly basis. MSFT has held the 20-week, now at 134.15, for the last two months. If 134.15 fails, Mr Softy is in trouble. The daily chart shows the same sideways consolidation as the weekly, the standard deviation bands are pulling in tight, so price is likely going to jump very strongly in one direction or the other. Tight bands do not predict direction, only magnitude. If it spikes higher, short it. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.