Microsoft shares broke back into the channel likely ending diagonal.

I've been on top watch for MSFT shares for some time now.  I think that the collapse of dot bomb was never allowed to fully play out due to economic intervention by the federal reserve.  I think that the fed is running out of capability to intervene and that at some point in the next couple years it will lose control of the bond market.  I think that when interest rates go up, all stock will go down but that the dinosaurs will get hit harder than the newer more nimble players. 

I think that MSFT is a total dinosaur which has been working harder to protect turf than to innovate.  In other words, it has been playing defense instead of doing things that support real economic growth.  I think that they missed their chance to lead in the super hot hyper mobile sector and that they are very late to the game in web based apps.  In web based apps they are trying to continue charging very high rates even though this is no longer warranted now that apps are being decoupled from the OS via web browsers.  In other words, the future is not bright for MSFT and it will begin laying off people in drove over the next few years in response to this new reality.  The best and brightest will look elsewhere for opportunities.

And so for a look at the long term chart.  After the 5th wave down in 2008-2009 we should expect to see a-b-c play out.  That does seem to have happened.  B seems to have been a triangle, penultimate wave.  C looks like it will turn out to be an ending diagonal.




A closer view of the a-b-c fed-driven bull market for MSFT suggests that the C wave finished after 5 rail bumps of an ending diagonal.  First confirmation happened when the waves broke out the top rail and have now come crashing back through.  If the shares don't retake that top rail very soon then the herd will sense it as great resistance.  I think it may already be too late.

The 2nd (and more convincing confirmation) would be the break below the lower rail (see red circle).  That is when the short sellers will come into the attack.  Microsoft is simply not ready with any corporate news that will fend them off.  They are slipping on all battle fronts and now have to suffer the uncertainty of a CEO change.  Markets hate uncertainty and they will not be giving MSFT any special consideration here.

Unless these shares can retake that top rail real soon now, I see this as a strong sell/conviction sell.