MSFT Microsoft Monthly Chart; Overbot; Rising Wedge; Negative Divergence Developing; Upper Band Violation; Price Extended

Mr Softy is a stellar outperformer in the stock market over the last decade. Microsoft was stagnant but once it took off to the upside it never looked back. The Federal Reserve and other global central bankers, all acting in collusion nowadays, send the MSFT stock price from the bottom left to the upper right of the chart. 11 years of easy money has all assets pumped into the stratosphere.

MSFT, AAPL, FB and GOOGL are the four hottest stocks so they will be last to roll over. The broad stock market will roll over first. MSFT rallies from 95 to 164 over the last year alone; an astounding +73% gain. MSFT rallies from 132 to 164 in Q4 on the Fed's obscene QE money-pump; a fantastical +24% gain in only three months. AAPL jumps from 140 to 318 during 2019 into today a humongous +127% rally and in Q4 leaps from 216 to 318 an unbelievable +47% pop on the Fed's easy money. The wealthy elite class dance with glee while spitting on the huddled masses. Isn't crony capitalism wonderful? FB pops from 128 to 222 in 2019 to present, a big +73% gain, and from 173 to 222, a huge +28% rally, in Q4 to present. GOOGL rocket-launches from 976 to 1443 during 2019 into this year an eye-dropping +48% rally and in Q4 Alphabet (Google) jumps from 1160 to 1443, a big +40% gain, courtesy of Chairman Powell and the gang. Life is great in America if you are the wealthy privileged class that owns large stock portfolios; the Fed keeps handing you easy profits and limitless wealth year after year for a decade. Too bad for everyone else, that's the way it goes.

Mr Softy and Apple are Dow Jones Industrials Index components. Thus, over the last year, MSFT gains 69 points and AAPL jumps 178 handles unbelievable gains. The wealthy can now buy another summer home. That is 247 total points by only two tech companies over the lat year. Using a rule of thumb of 7 to estimate the number of Dow points created yields a phenomenal 1729 points of upside in the Dow (INDU; DJI: DJIA) over the last year. Stop and think about that. Microsoft and Apple added 1729 points to the Dow over the last year. The Dow jumps from 23K to 29K in the same time period running over 6000 points higher but almost +30% of that gain in the Dow over the last year, say one-fourth of the gain, comes from only two stocks; MSFT and AAPL. That's hilarious. Keep in mind that the math works in reverse as well.

The MSFT monthly chart is in neggie d except for the MACD line and the histo that remain long and strong. This hints that a jog move is in store; down for a month or so, then back up for a month of so to print matching highs, and at that time the MACD line will probably go neggie d, say in the Feb-Apr time period, which would mark the long-term top (months and perhaps years) for Microsoft. AAPL is in a similar position. Looking at the GOOGL monthly, Alphabet is in negative divergence right now across all its indicators but the RSI and MACD show near-term juice. GOOGL and FB may stutter-step sideways in a sick chop for a couple-three months and then roll over.

MSFT displays overbot conditions on the RSI and stochastics agreeable to a pullback. The rising wedge pattern is ominous and the collapses can be dramatic. Price has violated the upper band so the middle band at 124, and rising, and the lower band at 85, and rising, are on the table although humorously, Microsoft pegged the upper band in 2016 and has been goosed ever since not back-kissing the 20-month MA for almost 5 years. Price is above the moving averages requiring a mean reversion lower. It would not be surprising to see MSFT sub 100 at the end of the year; a sub 140 number is likely a given.

The ADX interestingly negatively diverges as prices rise (bearish) although make no mistake the rally is identified as a strong trend higher and remains that way since 2017 (purple box). Watch to see if the ADX continues to roll over going forward hinting that the strong trend higher is dying. The Aroon blows you away. The green line is at the ceiling at one hundo and the red line is in the basement at zero. The bullish euphoria and all-in attitude is at the absolute peak and the bullishness cannot get anymore bullish for Microsoft. That's comical. The Aroon has nowhere to go except in a negative direction (green down and red up).

Mr Softy should receive a pullback in the near-term probably with the broad market. The MSFT weekly chart has strength remaining in its MACD and money flow so price may chop sideways for a few days and week or two which will create a near-term peak. MSFT will then drop from say late January into February probably to the 140-150 level, then back up again because the monthly MACD is long and strong. MSFT then likely tops out on a long-term basis at 150-180 in Feb-Apr. Keystone does not own AAPL, MSFT or GOOGL, long or short, right now. The charts can be monitored as time moves along if the viewership is interested in seeing the information. 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.