Last Thursday after the market close, Microsoft announced earnings that beat the top and bottom line. MSFT ran up immediately after the earnings release, it made a new all time high on Friday’s open, but it was sold off straight from the high at open with higher than usual volume. This is a topping signal, Microsoft stock has topped on a great earnings report.
Microsoft is absolutely the bull market leader which is included in DOW, S&P and NASDAQ, all three indices. When a market leader like Microsoft sells off based on great earnings beat, it gives out hints about the general market condition. The true leaders of a bull market are the last ones to show signs of weakness.
In our last blog, we warned the S&P 500 cash index upside resistance at 3000 and 3077. It broke out at 3000 marginally, not it is showing the bull market fatigue.
In cycle terms, the current weekly that started on 06/07/2019 has finished 6 bars and it is showing the signs of making the alpha high. Inside the weekly cycle, it has finished the first daily cycle by 06/26/2019. It has finished 16 bars in the 2nd daily cycle that started on 06/27/2019. It is in the process of going down to finish the 2nd daily cycle’s high to low phase. S&P 500 index 2912 should provide support on this down move, if it breaks down 2912 hard, then a relief rally will take place to balance the oversold condition. It will have a few swings like that before the real selloff begins in August. So it is wise to stay away from the sideways churning. There is no reward to getting involved with the sideways market unless you can trade the swings, otherwise it’s best to take a break from it. Keep your powder dry, the time will come.