Microsoft Builds Potential Base

Apr 1, 2008: 1:33 AM CST

Microsoft Corp (MSFT) may be building a potential chart formation base (or platform) of consolidation and may attempt a rally from current levels.

A positive momentum divergence is forming as the swings narrow and the price stabilizes around the $27.00 level.

Recall that price alternates between range expansion and contraction, and the expansion has been to the downside in the stock, so a base formation is not surprising as the stock consolidates its recent losses.

Buyers have been stepping in to support the stock around $27.00, which also corresponds with major support via the 200 week moving average (see chart below):

In reality, there is significant chart resistance around the $30 level both on the daily and weekly charts which could impede upside progress unless a major fundamental or news-based report is released.

Also, the $27.00 zone appears to be containing price to the downside. Until one of these barriers is broken, Microsoft will likely be rangebound between these levels until there is enough of a momentum burst or catalyst to tip the supply/demand balance that currently exists.

1 Comment

One Response to “Microsoft Builds Potential Base”

  1. ainkurn Says:

    Corey, I really like the new look here. Your persistence in brilliant analysis to be envied. Keep it up.