Chart of the Day $MSFT – Stuck Between 2 Huge Gaps

by Enis August 23, 2013 12:41 pm • Commentary

Here’s a preview of what I’ll be discussing on Talking Numbers today between 3:20 and 3:30 pm EST on CNBC:

With MSFT’s massive gap higher today, the stock’s chart now has two obvious gap fill levels to watch going forward:

Daily chart of MSFT, Courtesy of Bloomberg
Daily chart of MSFT, Courtesy of Bloomberg

The first major gap in July was the gap lower after earnings.  The stock closed at $35.44 prior to its earnings release, and that gap was not filled today during regular trading hours (the stock did trade up to $35.50 in the pre-market).  I anticipate a major struggle for MSFT to get above that level in the near future.

On the downside, yesterday’s close of $32.39 now becomes an important level to watch as potential support.  It’s also notable because the area near that level also acted as support during selloffs in the stock in May and June.  Once again, I don’t anticipate the stock breaking below that level barring a major idiosyncratic event (disappointment over the new CEO for example) or significant, broader market weakness.

In the meantime, the bull/bear tug of war is likely going to be contained between those two levels.  In fact, the stock is currently trading down to near $34 after its gap higher, which is near the midpoint of those important gap levels.