Climbing Up A Steep Slope
Three factors in Microsoft’s
(
MSFT |
Quote |
Chart |
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PowerRating)
call for a follow-through watch. MSFT is breaking out above its 50-day moving
average, its downward sloping trendline, and its 50% retracement (Feb. high –
March low).Â
Now let’s look at the
other side of the coin…
This analysis would not
be complete without pointing out that there is a Goren-style gap from March 8,
2000. According to Goran’s first trading lesson, “The Power of Gaps,”
this is a zone of resistance that MSFT will have to overcome.Â
Also keep in mind that
long downtrends represent steep, treacherous uphill climbs that stocks face as
they fight their way back. Hapless traders who got caught in the downdraft
look for selling opportunities as prices rise.Â
Volume is not so
impressive. If we see the upside follow-through, you’ll want to look for
volume to greatly exceed the daily average.
Often, the picture
isn’t very clear. This is a good example of some good analysis that shows
nothing conclusive from either the long or short side. The best way not to be
wrong is to not have an opinion.
Until Wednesday,