Microsoft

The stock is entering its fourth week after stalling pennies from a 430.58 target that I first broached here last January. Isn't that sufficient evidence that THE top is in? asked a subscriber in the chat room. Ordinarily, I'd say yes. But this is no ordinary bull market, and we shouldn't underestimate its ability to trick us so that nearly every bull and bear still left in the game gets crushed when it ends. That is a given, and we've seen Mr. Market flex his muscles enough times over the years to become true believers in his ability to bamboozle the majority, especially at important turning points. Who would have guessed, for instance, that the most spectacular bull run in U.S. history would begin almost to the day in March 2020 when the country locked down against the covid threat? And now, there should be little doubt that the bull market will end with a flash of exuberance and bravado that are commensurate with the despair most investors felt in 2020. There is a palpable sense that we are close to a watershed top, but we shouldn't expect our instincts alone to locate it exactly.

The pattern shown projects a rally to at least 439.35. That would torpedo an argument I've been making since January -- i.e., that MSFT would make a bull-market top at exactly 430.58, and that the stock's subsequent fall would take the stock market and the global economy with it. I haven't given up on the possibility that my magic number at 430.58 will ultimately come close to having nailed the bull's last gasp, but the shorter-term pattern shown is just too compelling to think D will not be achieved. It has produced three winning 'mechanical' buys at the green line already and will continue to favor bulls unless a swoon in the next few days takes out C=412.79. Stay tuned.

The 'mechanical' buy that triggered when MSFT fell to the green line last Thursday was about as 'textbook' as they come, meaning it is all but certain to deliver a profit unless truly dreadful news greets stocks when they begin to trade Sunday evening. Acting on the signal by purchasing call options would have been a non-starter, however, since fully four days will have elapsed if the stock begins to move as early as Monday. That's why we should never purchase options just ahead of a long holiday weekend. Perhaps another opportunity will arise this week ahead of the stock's presumptive ascent to D=439.35. Stay tuned to the chat room and your email 'Notifications' to keep apprised. And, yes, this does mean my longstanding, ostensibly major target at 430.58 has been diminished by the certitude that a higher target of lesser degree will be reached. _______ UPDATE (Apr 2, 11:13 a.m.): Today's so-far moderate selloff has brought the stock down to the green line for the second 'mechanical' buy signal in three days. The first produced a one-level profit, but we'll be keenly interested to see whether this signal delivers as well. It would be unusual for so well-formed a pattern to fail to reach its D rally target -- in this case 439.35. _______ UPDATE (Feb 5, 9:48 a.m.): Microsoft has triggered a third 'mechanical' buy this morning since correctively bottoming at 412.79 three weeks ago. Ordinarily, the signal's usefulness degrades with each repetition, and so I am not suggesting that you jump on this 'sloppy thirds' opportunity. However, it will be interesting to see whether the stock fails to achieve a hat-trick of 'mechanical' winners.  This would be rare for the stock, which has notched precious few lower lows over the last several years without having completed a

Although the stock has continued to noodle around near a very major target at 430.84, I'm going to focus on the minor pattern shown, with a 439.35 target. It is clear, compelling -- and entirely likely to be reached, given Thursday's gap up through p=426.07. A pullback to x=419.43 should be bought 'mechanically', and you can also get short at the target if you've held a profitable position on the way up. For now, we'll pretend the 430.84 target doesn't exist.

Although AAPL precisely fulfilled a longstanding target at 430.54 on the weekly chart on Friday, the rally still has a ways to go before it achieves an 'extension' target at 456.88 that comes from the C-D leg of the larger pattern. This is how we deal with rallies when they exceed big-picture targets, and the smaller segment should be judged on its own merits without much regard to  -- in this case -- MSFT's weekly chart. That implies 456.88 is very likely to be achieved, and precisely, given price action at p. The initial stall there confirmed the legitimacy of the pattern itself, while the easy penetration of p=383 six weeks later strongly implied the rally would continue to D. ________ UPDATE (Mar 21, 10:24 a.m.): However compelling the long-term target at 430.54 might seem, the 439.35 target shown in this short-term picture takes precedence at the moment, since the explosive move past p implies D=439.35 is all but certain to be reached.

The pattern shown was compelling enough to suggest that MSFT might make a top at the D target, 420.26. But THE top? My guess is not, which would make all of the jacking off for the last month a consolidation. It certainly doesn't look like it's setting up a plunge, although that could change very easily with a downdraft that penetrates three supportive lows recorded since January 31. In any event, I have no trading ideas to begin the week, so we'll have to see what develops.

We have an unfulfilled target on the weekly chart at 430.58.  However, I'll treat the one at 420.26 shown in the inset as a possible major top until such time as it is exceeded. Paying too little attention to it cost me dearly when I failed to exit a profitable calendar spread held during the Option Experiment. There is a potential voodoo short from beneath the high, so stay tuned to the chat room and your email notifications if you've been itching to buy put options on this stock.

The hourly chart is mildly bearish, albeit with no hint of a major top. That's why I've reproduced the weekly chart, with its compelling target at 430.58, as a reminder of how close the stock is to hitting a resistance that it is unlikely to penetrate, much less brush aside. It will have help putting in a top from a few other lunatic-sector faves, including CMG and NFLX, which have maxed out their respective weekly charts. If MSFT struggles to push above Friday's  412.06 high for a day or two, that would leave it vulnerable to a 50-point fall over the near term. We won't attempt to short it, though, unless it pops to  430, so stay tuned.

MSFT has replaced AAPL on the list for the time being, since its chart is more fun to look at. This is notwithstanding the tonnage that has been distributed between 403 and 410 over the last three weeks.  It is real and it is heavy, but we know that DaBoyz are capable of rendering it insubstantial with a short-squeeze when conditions are right. My hunch is that they will still have to take the stock down by at least $3-$4 before they can set up the volumeless leap into a sunny-and-mild wafting zone above $410. We are still focused on a target at 430.58 (or possibly 437, which comes from the weekly chart) as the place where this aging bull market will seven out.