MSFT Microsoft Weekly Chart; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation; Price Extended; Distribution; Mr Softy Topping-Out on Weekly Basis

The Mr Softy chart was posted a little while ago and the idea was to wait for the weekly chart to top out when the MACD goes neggie d. Keystone's 80/20 Rule says 8's lead to 2's on the way up so 180 opened the door to 220 and you had to be aware that 220 may occur. MSFT price topped out at the 212 palindrome two weeks ago, however, if you squint, you can see the MACD line a tiny hair higher than late June when the other price high occurred. All the other indicators are negatively diverged (red lines) wanting to see a spankdown now on the weekly basis. That sliver of upside juice fumes remaining with the MACD may send price to the 212 level, or a point or so higher, but the MACD at that time should be firmly neggie d. Same-o if price pops to 220 to satisfy the 80/20 rule.

The Microsoft weekly chart is ugly. The neggie d discussed above, overbot RSI and stochastics and the rising red wedge pattern are bearish. Price has violated the upper band so the middle band at 190, and rising, and lower band at 158, and rising, are on the table. Price is extended above its moving average ribbon desperately needing a mean reversion lower.

The ADX showed a very strong uptrend in play through 2017 but petering out in late 2018. The strong uptrend resumed at the start of this year with everyone bulled-up and jumping on the Mr Softy train. Bloop. That joy went flaccid after covid hit and the ADX is fighting to maintain the strong uptrend but it is slipping away (sub 30). This behavior supports a pullback. The Aroon gave a buy signal at the start of June as the Federal Reserve floods the United States with liquidity. Folks scoop up the Keynesian easy money and buy stocks like madmen. The Aroon green line is overbot and red line is oversold so going forward both will be moving into a bearish direction and potential bearish cross.

There are 3 crystal clear distribution weeks so far (purple circles). The smart money is handing off shares to the dumb money. Joe Sixpack, in between slurps, thinks he is missing out on easy stock market gains so he is enthusiastically buying stocks. He does not want to miss the train leaving the station. Well, every top needs a bag-holdin' sucka. It's what makes the game so much fun. If you bot MSFT over the last few months, figuring that you can easily find a fool to sell it to at anytime in the future since the stock goes up forever, you sir, or madam, are the fool.

The MSFT monthly chart is also in negative divergence except for the MACD, therefore, Mr Softy does have another matching or higher high in its playbook on the monthly basis. The Microsoft bulls wipe beads of sweat from their foreheads and anxiously read on. The daily chart topped out with neggie d in late July early August and receives a spandown but the dip-buyer's are very quick wanting to own more Microsoft stock. The daily is bumping sideways now but once the weekly rolls over and starts receiving its neggie d smackdown, the daily chart will go along with the down direction.

Mixing it all together and sprinkling on some magic trading voodoo dust, MSFT is topped-out now and can be shorted since it is about to begin a multi-week slide lower. The 220 lingers as an upside target area but this would depend if happy talk occurs (from Fed, other central banks, Whitehouse, Trump, vaccine makers, etc..) once stocks begin trading for the week. Regardless, MSFT is topping now on the weekly basis and is an attractive short from 200-230.

The 180-190 cluster is strong price support so it is an educated guess that MSFT will make its way back to there for a test. Ditto the 130-140 area which is likely at some point over the next year but may occur as fast as over the next month or two.

After a decline for a few weeks, say into mid or the back-half of September, MSFT will rally when the weekly chart positively diverges. Since the monthly chart wants another high, price will come all the way back up again over a few weeks, so, say, in October, MSFT will have probably taken a round trip down and back up again. At that time, say the September-November time frame, the MACD on the monthly chart will go neggie d, along with all the other indicators, and the long-term top will be in for Mr Softy. After that he will melt-away sideways to sideways lower for months and years forward.

Isn't it hilarious that people are bullishly giddy and blindly complacent believing that stocks such as MSFT, AAPL, AMZN, FB, NFLX and GOOGL will continue to rally higher forever? A year from now, when most stocks may be down from -20% to -80% from current levels, these fleece-vest-wearing folks will be crying in their cafe lattes. Keystone does not own MSFT long or short right now but will probably open a short position starting tomorrow.

If you enjoyed the massive profits on MSFT over the last few years riding the rally higher, you bess 'git outta Dodge now, while the gittin' is good'. If you do not, you will lose  a bunch of money over the coming weeks, then, if you are lucky, price may come back up a couple months from now and give you a second chance to ditch the long position. Sell the position to the bag holdin' sucka's right now like the institutions are doing. Joe Retail is buying the high-flying tech stocks so he can brag to the cute ladies about his trading skills at the office water cooler. 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.