Microsoft Corporation MSFT gapped down to start Friday’s session after the Labor Department released strong jobs numbers for November, sparking fears the Federal Reserve may not be succeeding at slowing the economy.
Intraday bulls were buying the dip in some growth stocks, causing Microsoft to erase much of its losses.
Of the three stocks that hold the top weightings in the S&P 500, Microsoft has shown the most strength, surging over 18% since Nov. 4. Comparatively, Apple, Inc AAPL, which holds the largest weighting in the index, and Amazon.com, Inc AMZN, the third largest weighting, have rebounded about 3% and 4%, respectively, since that same date.
With the S&P 500 trading near the 200-day simple moving average (SMA), bullish traders are hoping the index could confirm its bear cycle has come to an end over the coming days and weeks. Weakness in Apple and Amazon should give bullish traders pause, however, because they aren’t moving in tandem with the S&P 500.
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The Microsoft Chart: Microsoft has been trading in an uptrend since Nov. 4, making a consistent series of higher highs and higher lows on the daily chart. Microsoft’s most recent higher high was formed on Thursday at $256.12 and the most recent confirmed higher low was printed at the $238.21 mark on Tuesday.
- Over the last three trading days, Microsoft may have printed a bull flag pattern, with the pole formed on Wednesday and the flag forming on Thursday and Friday. If the pattern is recognized and the stock breaks up bullishly from the flag, the measured move is about 6.7%, which suggests Microsoft could climb up toward $266.
- If Microsoft breaks up from its bull flag, the stock will also print another higher high to confirm the uptrend is still intact. If the stock continues to trend lower within the flag and loses support at the eight-day exponential moving average, the bull flag will be negated.
- Microsoft has multiple gaps above on its chart, with the first gap falling between $260.40 and $265.16. Gaps on charts fill about 90% of the time, which makes it likely the stock will rise up to fill the empty trading range in the future.
- Microsoft has resistance above at $256.84 and $263.19 and support below at $249 and $243.
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