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MSFT - Dangerous Long Here

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April 27, 2011 – Comments (0) | RELATED TICKERS: MSFT

My first pick is MSFT. That has made an encouraging double bottom with positive RSI divergence. Looking longer term at the chart though there are a couple of worrying aspects to it:

Here's the Chart Analysis on MSFT.

Firstly, after breaking down from a rising channel the broken lower channel trendline is now acting as resistance. That may hold as resistance. Secondly the recent double-bottom was at an H&S neckline. That H&S may fail but a move to test the resistance level in the 27 area would be normal enough with that having been the height of the left shoulder on the pattern.

If MSFT manages to break up through double resistance in the 27 area,  then it would look more interesting, but there's also declining resistance from the 2007 high at slightly over 29, so upside may in any case be limited.

Overall this looks best avoided, though it could be an interesting spec short in the 27 area with a tight stop if the 60min RSI looks encouraging there.

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