Microsoft Pulls Back Following Breakout

Microsoft was one of the big winners last earnings season, beating estimates across the board and raising guidance. Now it’s pulled back to hold some key levels.

First, MSFT made a low yesterday slightly below its 50-day simple moving average (SMA). However it quickly rebounded to close above it.

Second, the current price zone is near the previous peaks of November and December.

(As a side note, it seems that the big Nasdaq stocks are now divided into “haves” and “have nots” based on the September 2 exuberant top. MSFT, Alphabet and Tesla have managed to break out. Amazon.com, Facebook and Apple have not.)

A third feature on MSFT’s chart is the nearly oversold condition on stochastics.

Depending on how the broader market behaves in coming weeks, the software giant may consolidate and test lower. Still, the broader chart appears bullish, with prices breaking out of an eight-month consolidation pattern and now retesting old highs.

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