The stock remains an odds-on bet to achieve the 449.42 rally target shown. This is one reason why, in the ES tout above, I've favored the scenario in which the futures make a marginal new high before a bear market begins in earnest. If MSFT should pull back to the green line first, however, that would set up a 'mechanical' buying opportunity that would be too juicy to pass up. It would be good for at least a one-level ride, but probably more, as my target forecast implies. ______ UPDATE (Sep 5, 3:10 p.m.): This is still the only stock we need follow for an accurate, high-confidence read on the bull market. The 449.42 target is still very much in play; moreover, the stock would trigger a back-up-the-truck 'mechanical' buy if it falls just a little more, to x=401.54 (stop 385.57). ______ UPDATE (Sep 6, 9:05 a.m. EDT): I was barely stirring when MSFT took a Whoopee Cushion bounce this morning from within a hair of my back-up-the-truck number. But if you were alert to the opportunity, it's time to cash out half of the position for around 409, the current price. Check the chat room for some Howard Cosell commentary on all the excitement. Here's what a Whoopee Cushion bounce looks like in stop-motion.
MSFT is taking its sweet old time getting to D=449.42, but it will get there. That's very significant, because as long as there's an outstanding rally target in this bellwether, the broad averages will continue to waft higher. A pullback to the green line (x=401.54) would offer an excellent opportunity for bottom-fishing or augmenting a long position. However, I doubt we'll see such weakness before the stock takes another leap skyward. I will signal any impending swings if they have tradable consequences, but there is little in prospect at the moment.
Our favorite bull market bellwether is still on track for a rendezvous with 449.13, the 'd' target of the reverse pattern shown. Buyers didn't exactly shred the midpoint resistance (p=417.36), but they did exceed it by four points, then closed above it. That is sufficient for us to infer the stock is likely, if not quite certain, to achieve 'd'. A pullback first to x=401.47, however unlikely, would offer an excellent opportunity to get long 'mechanically', although I expect the stock to head straightforwardly to p2=433.24 when trading resumes Sunday evening.
The weekly chart shows our #1 bellwether stock to be reliably headed down to at least 332.11, the 'd' target of a perfectly clear reverse pattern. That would represent a 29% fall from the record 468 achieved in mid-July and 18% below Friday's close. In the meantime, because last week's low occurred almost exactly midway between p and p2, a rally to the green line (x=434.29) would trigger a succulent 'mechanical' short. Keep in mind that that is not a rally target, only a reference point we use to do this type of trade. Another place where you could attempt to get short is at 417.36, the midpoint Hidden Pivot resistance, on the hourly chart, of a=404.51 (5/31). The pivot should be used as a minimum correction target for the time being. _______ UPDATE (Aug 16, 3:30 a.m.): The uptrend has easily and decisively exceeded p=417.36 with a short-squeeze waft that has put the stock on-track for a shot at D=449.13 over the near term.
The so-far 14% correction from the record-high 468.35 achieved on July 5 is about to test the support of a midpoint Hidden Pivot at 400.23 (see inset). The 'reverse' pattern from which that number is derived is a very good one for proprietary reasons that I won't go into, but suffice it to say, it will give us a high-confidence "read" on trend strength, as well as precise coordinates for trading with or against the trend at opportune times. For now, please note that a decisive breach of p=400.23 will send this stock down to at least 332.11. That would represent a nearly 30% correction from the top, with no assurance that the worst was over. Let me remind you that I treat Microsoft as my #1 bellwether because the company's subscription revenue model for the Windows operating system and Office suite make the firm's vast revenues as bomb-proof in hard times as could be conceived.
The 435 'd' target of the reverse pattern shown looks too compelling for the stock to have crushed it effortlessly. It did, though, signaling the likely failure of the next rally to achieve new record highs. Even if it did, I'd treat the breakout as a phony and lay in a store of put options that correlate with a sell signal on a chart of lesser degree (aka 'camouflage'). Let's first see whether the stock is able to push past the 'external' peak at 446.96 recorded last week on the way down.
MSFT is falling after having slightly exceeded the 462.80 target shown. Ordinarily I would regard the overshoot as mildly bullish, but in this case the target was simply front-run by sellers eager to short an ABC pattern so obvious it could be seen from outer space. With all these clowns piling on, the short squeeze that occurred above the target should have been stronger. The implication is that the stock is falling on organic weakness and will need to correct stridently before it can turn around. Hidden Pivot levels aside, my guess is that the pullback will come down into the space defined by the two prior lows at, respectively, 388 an 404.
I've used the 'extension' of a larger pattern's C-D- leg to produce a chart that will be more usable for trading purposes. It is similar to the one accompanying the E-Mini S&P tout above, and it also offers similarly enticing odds for a 'mechanical' bid placed at the green line (x=418.37). The theoretical stop-loss would be at 388.02, implying the trade should be initiated using a 'camouflage' set-up on a small-degree, intraday chart. There can be no certitude that the stock will reach D=509.40, since the move through p=448.72 was not dramatic. You can count on a ride to at least 479.06, however, no matter where you get long.
Since MSFT shredded the 462.80 target featured here last week, albeit without the usual ballyhoo, the stock must be presumed bound for the 509.40 target shown in the chart. This Hidden Pivot was mentioned earlier as an alternative possibility, but I also told you to be on your guard against a possible top at 494.23, midway between p2 and D. Few chartists would be looking for a turn there, and that is why we should. Your trading bias should be bullish in the meantime, at least until p2=479.06 is achieved.
Microsoft apexed last week just 71 cents (0.1%) below a long-term target at 456.88 I'd billboarded here. It happened on Thursday, but on Friday the stock plunged to 446.41, most of it coming in the final 30 minutes of the session. This put the previous day's record high in sharper relief, increasing its potential importance. It also wiped out the entire week's gains, presumably creating a layer of urgent supply of a kind that this stock's handlers are not accustomed to coping with. Expect more backing and filling in the week ahead and a test of lows at 441.27 and 436.72 recorded on the way up during the last two weeks. _______ UPDATE (Jul 2): There was no backing and filling whatsoever. Instead, MSFT turned Friday's criminally rigged plunge into a v-shaped swoon powered by short-covering. The 456.88 target 'should' still contain bulls, albeit imprecisely, given the obviousness of the pattern. If it doesn't, don't count on 462.80, the 'D' target associated with the sucky marquee 'A' at 213.43, to do the job precisely either. An 'extension' target derived solely from the C-D leg lies at D=509.40, where A=309.45 on 9/29/23. p2=479.06 for that pattern, and don't think it would be impossibly cute for the final top to occur at 494.23, midway between p2 and D. That is a price point so nicely ensconced in our discomfort zone that no one on earth could be watching it.
