Microsoft Corp. (NASDAQ: MSFT) opened with a positive gap on Tuesday and traded higher to hit resistance at 240.00, before retreating somewhat. Overall, the stock continues to trade above the upside support line drawn from the low of October 30th, and thus, we would consider the near-term outlook to still be positive.
A clear and decisive break above yesterday’s high may pave the way towards the stock’s record peak, at 246.12, hit on February 16th. If that zone is not able to stop the advance this time around, then Microsoft will enter uncharted territory, with the next possible resistance being the round number of 250.00. Another break, above 250.00, could see scope for extensions towards the next psychological zone, at 255.00.
Shifting attention to our short-term oscillators, we see that the RSI, already above 50, has turned up again, while the MACD lies above both its zero and trigger lines, pointing up somewhat. Both indicators detect upside speed and support our view for further advances in this stock.
In order to abandon the bullish case, we would like to see a clear dip below the 217.40 barrier, which is marked as a support by the inside swing high of January 14th. The price would already be below the aforementioned upside line and it may slide towards the 212.00 area, which provided strong support on January 6th and 15th. Slightly lower lies another key support, at 208.00, but if it breaks as well, then we could see larger declines, perhaps towards the low of October 30th, at 199.50.
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