Microsoft Might Be Hitting a Speed Bump

 | Jun 19, 2017 | 1:13 PM EDT
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Microsoft (MSFT) has become a little more volatile in the past few weeks, which is a change from the steady grind higher from December to late April. Since early May, prices have seen more up-and-down movement, which could be a clue to its next move.

Let's check the latest charts and indicators on this component of the Dow Jones Industrial Average (DJIA) to see whether it will add to or subtract from the record-setting market index.

In this daily chart of MSFT, above, we can see the rising 50-day moving average line has successfully identified the uptrend and every test of the line has been a buying opportunity. MSFT is above the rising 200-day moving average line. The daily On-Balance-Volume (OBV) line moved higher from early March to early June, telling us that buyers have been more aggressive. So far in June, the OBV line has been weak, suggesting a shift toward more aggressive selling. The daily Moving Average Convergence Divergence (MACD) has crossed to a liquidate-longs or take-profits-on-longs sell signal.

In this daily candlestick chart of MSFT, above, we have some additional technical clues. The candle chart is showing upper shadows above the $71 level in recent price action. The Bollinger bands have begun to narrow, which can precede a new direction.

In this weekly bar chart of MSFT, above, we can see prices are above the rising 40-week moving average line. The weekly OBV line has leveled off or flattened in the past four months. The MACD oscillator is poised for a bearish crossover and take-profits sell signal. Net-net, the current chart of MSFT suggests caution on new and existing long positions as the indicators are neutral or weakening.

Bottom line: If you are long MSFT, I would suggest raising sell-stop protection to a close below $67. A close above $73 would get me to become more bullish. These levels may seem a little close, but I want to err on the side of caution.

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