MSFT Analysis for 01.05.2007

MICROSOFT - MSFT

Monthly chart shows the stock has been stuck in a large trading range since 2000. The last move up into the November 2007 high from the December 2000 low has traced a 3 wave, abc pattern. While this is a consolidation pattern, there is no clear sell signal/pattern yet on this timeframe.

Weekly chart shows a 3 wave abc pattern into the $37.50 area high. The first time the bulls tried to take the stock up in early November, they were quickly met with bears who tried to take it down. The second time the bulls tried to make a run for the $37.50 area high, they were met with bears eager to sell once again, creating an evening star reversal candle pattern. Last week's price action resulted in a close below the 8ema. Look for further weakness in the weeks ahead. First downside target to keep in mind is the $27- $28 level.

Daily chart shows increased selling the past week. Friday's price action shows a major change in trader sentiment as traders gapped down the stock at the open, in their haste to exit the stock. Price is now currently below 8ema, 34ema and the 50sma. There is short term weakness in the stock, as traders look at profit-taking given last week's disappointing economic reports.