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by Arthur Hill
Strong Chaikin money flow and a bullish pattern point to higher prices for Microsoft.
Position: Accumulate
Arthur Hill
Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.
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FLAGS AND PENNANTS
Microsoft Continues To Show Accumulation
09/12/06 08:49:50 AMby Arthur Hill
Strong Chaikin money flow and a bullish pattern point to higher prices for Microsoft.
Position: Accumulate
| Microsoft led the market higher from mid-July to mid-August and then consolidated with a falling flag. This advance occurred in two stages with a consolidation in between (blue box). The mid-August gap and breakout signaled a continuation higher and the stock started the falling flag around 26. The gap is holding, and this is bullish, as long as it remains unfilled. See Figure 1. |
|
| FIGURE 1: MICROSOFT, WEEKLY. MSFT led the market higher from mid-May to mid-August and then consolidated with a falling flag. |
| Graphic provided by: MetaStock. |
| |
| The falling flag is also bullish and traders should look for a continuation breakout. The stock firmed around 25.5 late last week and formed a long white candlestick on Monday. The candlestick closed above the upper flag trendline and a breakout looks imminent. I would like to see the stock break through the late August and early September highs to complete the breakout and signal a continuation higher. At the very least, Monday's bounce affirms key support at 25.3 and a move below this level would negate the flag. |
| The Chaikin money flow (CMF) remains strong and this shows accumulation within the flag. On the whole, the CMF has been above 0.20 (20%) the last two weeks and buyers are keeping up the pressure. This also increases the odds of a breakout in the stock. A move into negative territory for CMF would show a sudden change of heart and this would serve as a warning sign. |
Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.
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Date: 09/12/06Rank: 4Comment:
Date: 09/13/06Rank: 3Comment:
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