MSFT
reports after close this Tuesday. Everything that I see suggests that price is at an inflection point, and likely due to pullback. I expect that this earnings release will need to be a beat, communicate progress on AI, and provide strong forward guidance for additional upward continuation in the near term. While it's still 19% off of its all time high, MSFT has had strong performance YTD. It's been a clear favorite in the AI narrative with its investment in ChatGPT and potential for integration across its products. Anyone dismissing AI as a fad needs to sit back and look at the big picture. It's coming at us quickly and will be transformational. Every tight labor market in economic history has been followed by adoption of workforce productivity and automation.
The TA suggests that MSFT is over extended in the short term. It's far above its 55EMA, RSI shows recent bearish divergence, MACD and leading MACD have rolled over, and price has been hovering at the 0.5 fib retrace from ATH and dense volume profile. In addition, we can see that recent price movement is supported entirely by short term inflows as long term positions have gradually drawn down. The longer term channel doesn't provide as much clarity, but any number of ways that I draw the fib time zones indicate that this is a time period for a shift in sentiment.
While this isn't a company to bet against, I'm planning to take some profit prior to earnings and will look for opportunities between 250 -265 for accumulation. A sustained movement above $295. would suggest further upside continuation.
