Microsoft
Microsoft Corporation (MSFT) Tends To Drop Post-EarningsMicrosoft Corporation has been trending upward as are most stocks and sectors since the U.S. elections last year. Although "good" numbers and much hype surround markets, Microsoft has not had great results after their earnings calls for the last four years. The stock is also at the top of its clearly defined trend channel which has always resulted in a decline over the next few weeks. We have laid out a study of historical movements for the stock in this article. Will history repeat itself again causing a 5% plus drop?
When we look at technical indicators, the relative strength index (RSI) is at 78.4752. RSI tends to determine trends, momentum, overbought and oversold levels as well as likelihood of price swings. I personally use anything above 75 as overbought and anything under 25 as oversold. The RSI is currently overbought. This milestone has occurred 112 times and its significance is discussed below.
The positive vortex indicator (VI) is at 1.3159 and the negative is 0.6303. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the stock is moving down. The positive and negative are at somewhat extreme levels away from their central point of 1. Their current retreat back to 1 typically flags the end of the upward movement while signaling a drop for the stock.
The stochastic oscillator K value is 94.8017 and D value is 81.1292. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals and short-term activity. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the stock is trending up. When the D value is higher that the K value the stock is trending down. The stochastic is certainly in overbought territory. The D value is still well below the K value and it could be a few more days before the D is greater than the K. When this crossover occurs, the stock could be ready to drop.
SPECIFIC ANALYSIS
Only one other time since 2000 was the RSI and positive VI at or above today's level at the same time the stochastic oscillator was overbought with the earnings call three days away. The stock dropped 5.21% over the following 14 trading days on that occasion.
The stock has dropped 12 of the last 17 times from its close price three days prior to the earnings call. Of these 12 occasions, the minimum drop is 0.67%, median drop is 4.40%, and maximum decline is 14.97%.
On four occasions since the start of the Dot Com Bubble Burst has the RSI and positive VI been at the same level while the stochastic oscillator was overbought. The minimum days to hit a bottom was 14 and the minimum stock loss was 4.62%. The median stock decline was 5.81% and maximum was 16.54%.
On 12 occasions the RSI and positive VI have been near their same levels are higher while the stochastics oscillator was overbought. The stock has dropped a minimum of 3.03% and median of 5.79% throughout these instances.
The RSI has closed at or above its current level 112 times since 1986. Over the next 30 trading days from this point, the stock does not always drop, the median decline is 6.86% and average loss is 8.68%.
Finally, the stock has been in a discernable trend channel since April 2016. The stock hit the top of this channel on Friday which it has done five other times since it began. The quickest drop from the top has occurred in three days and the slowest bottom occurred in 20 days. The minimum drop from the top of the channel is 3.23%, median is 4.79%, and max is 5.79%.
Between all of the aforementioned historics, we are confident the stock could drop at least 3.5% over the following 35 trading days. The significant drop should take shape after earnings are announced around October 26. Remember, even positive earnings have resulted in declines.
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MSFT Always Drops When This HappensMicrosoft has been in a bull trend since 2012. On six occasions through this bull, three of the technical indicators discussed below are at the same or higher levels than they are now. I have laid out the reasons and levels to which the stock may dip while it most likely continues its overall bull trend.
When we take a look at technical indicators, the relative strength index (RSI) is at 75. RSI tends to determine trends, overbought and oversold levels as well as likelihood of price swings. I personally use anything above 75 as overbought and anything under 25 as oversold. Currently the RSI is oversold.
The positive vortex indicator (VI) is at 1.2626 and the negative is at 0.7155. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action is moving downward. The positive VI is currently at an extreme level to which it and the stock always retreats from.
The stochastic oscillator K value is 90.1109 and D value is 87.9759. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals and short-term activity. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the stock is trending up. When the D value is higher that the K value the stock is trending down. The stochastic is currently overbought, and the stock should decline in the next few days.
Since the current long-term bull began, there have been six times when the RSI and positive VI were at or above their current close price while the stochastic was overbought. These occasions led to a drop in the stock. The median drop occurs over 8.5 trading days and results in a 4.34% loss. The minimum drop on these occasions is 3.58%.
Considering the RSI, TSI, VI and stochastic levels, the overall direction favors a move to the downside. Based on historical movement compared to current levels and the current position, the fund could drop at least 3% over the next 28 trading days if not sooner.
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Microsoft Is in a Channel!NASDAQ:MSFT is in a channel flow since October 2016. While it is not the most definite bear and bull run there are key points that MSFT will hit. Today it is hitting a key spot of a potential resistance line that stretches back to December 2016. If the stock follows this trend it will follow this ceiling for a day or two. With potential gains after it reaches next Monday when it starts to rebound. Check it out!
Balanced in range, but downside risks in forceNo real change in the Facebook monthly charts, as prices continue to consolidate the sharp fall from the October highs.
One interesting development, however, is the deterioration in price action relative to the S&P500 Index. If this deterioration continues, asset managers will likely be forced to reduce Facebook exposure, and move into more compelling names.
Is Microsoft a viable alternative?
MICROSOFT STOCK PREDICTIONS FOR 2016 AND 20172016/11/18. Microsoft stock forecast for next months and years.
Microsoft stock price predictions for November 2016.
The forecast for beginning of November 58. Maximum value 61, while minimum 54. Averaged Microsoft stock price for month 58. Price at the end 57, change for November -1.72%.
Microsoft stock predictions for December 2016.
The forecast for beginning of December 57. Maximum value 59, while minimum 53. Averaged Microsoft stock price for month 56. Price at the end 56, change for December -1.75%.
Microsoft stock price predictions for January 2017.
The forecast for beginning of January 56. Maximum value 59, while minimum 53. Averaged Microsoft stock price for month 56. Price at the end 56, change for January 0.00%.
Microsoft stock predictions for February 2017.
The forecast for beginning of February 56. Maximum value 60, while minimum 54. Averaged Microsoft stock price for month 57. Price at the end 57, change for February 1.79%.
Microsoft stock price predictions for March 2017.
The forecast for beginning of March 57. Maximum value 64, while minimum 56. Averaged Microsoft stock price for month 59. Price at the end 60, change for March 5.26%.
Microsoft stock predictions for April 2017.
The forecast for beginning of April 60. Maximum value 61, while minimum 55. Averaged Microsoft stock price for month 59. Price at the end 58, change for April -3.33%.
Microsoft stock price predictions for May 2017.
The forecast for beginning of May 58. Maximum value 65, while minimum 57. Averaged Microsoft stock price for month 60. Price at the end 61, change for May 5.17%.
Microsoft stock predictions for June 2017.
The forecast for beginning of June 61. Maximum value 61, while minimum 55. Averaged Microsoft stock price for month 59. Price at the end 58, change for June -4.92%.
Microsoft stock price predictions for July 2017.
The forecast for beginning of July 58. Maximum value 65, while minimum 57. Averaged Microsoft stock price for month 60. Price at the end 61, change for July 5.17%.
Microsoft stock predictions for August 2017.
The forecast for beginning of August 61. Maximum value 61, while minimum 55. Averaged Microsoft stock price for month 59. Price at the end 58, change for August -4.92%.
Microsoft stock price predictions for September 2017.
The forecast for beginning of September 58. Maximum value 61, while minimum 55. Averaged Microsoft stock price for month 58. Price at the end 58, change for September 0.00%.
Microsoft stock predictions for October 2017.
The forecast for beginning of October 58. Maximum value 63, while minimum 55. Averaged Microsoft stock price for month 59. Price at the end 59, change for October 1.72%.
Microsoft stock price predictions for November 2017.
The forecast for beginning of November 59. Maximum value 65, while minimum 57. Averaged Microsoft stock price for month 61. Price at the end 61, change for November 3.39%.
Microsoft stock predictions for December 2017.
The forecast for beginning of December 61. Maximum value 68, while minimum 60. Averaged Microsoft stock price for month 63. Price at the end 64, change for December 4.92%.
Microsoft stock price predictions for January 2018.
The forecast for beginning of January 64. Maximum value 69, while minimum 61. Averaged Microsoft stock price for month 65. Price at the end 65, change for January 1.56%.
BLUE CHANNEL- Monthly and Weekly UP
Double Lines- Peak of .com bubble and All-Time High from 1999/2000 *Broken
Short term top for Microsoft?Technically Speaking
Nice selling pressure from last week, note green arrow on chart. The 56 level will look to provide support, if that level goes, the next good support comes in at 58.
What to do?
If looking to short, a stop above last weeks high of 61.37 makes sense. Target the 56 and see how it trades. For the longer term play, look to hold to the 48 level. Could be a long shot, but the bigger money is in the big swings.
If looking to buy, I would wait until the 48 level, no certainty it gets there though?