Microsoft’s swift 10% plunge recently prompted someone in the chat room to note that it cannot be good for the market as a whole. Agreed, although from a technical standpoint it should be noted that the stock could fall a further 10%, to 24.30, without negating the bullish impulse leg that ended with early March’s peak at 32.95.
My strong hunch is that MSFT is headed down to at least the 22.05 midpoint support of the big pattern shown. That pivot is tied to a ‘D’ target a 11.10(!),which at this point seems farfetched. Nevertheless, and as far as I’m concerned, Windows 8 has the potential to be the biggest disaster in the company’s history — a product that would seem to hold no appeal whatsoever for business users, let alone a reason to upgrade from Windows 7. We shall see. In the meantime, we should endeavor to catch a ride south from the top of the next rally, since the subsequent downdraft could be a 20-percenter for shorts.
Given Microsoft’s huge cash hoard, acquiring shares below $20 would be like buying dollar bills at half-price. Is there a possibility that the company’s spare tens of billions are parked in an unsafe place? If so, the epiphany awaits that will reveal the $2 trillion surplus held by U.S. corporations to have been as ephemeral as our banking system’s alleged reserves. [This just in: A ComputerWorld article calls Windows8 a “strategic mistake,” and a “Jekyll and Hyde operating system that is weak on tablets, terrible on PCs.” Click here.]