Steve,
I have given your questions a lot of thought. It is very difficult to provide the answers that someone is seeking, especially if they don't have a working knowledge of TA. I might add, it's hard for me to provide the proper response when I don't know someone's time frame for investing, or their risk tolerance level.
Since I don't know what it is that people are looking for when they ask questions of me, I try to share different scenarios or ideas that may help them to better define their own scenario.
Technical analysis needs a trend in order to be effective. It doesn't matter which way the trend is headed, it just needs to be defined. In the case of MSFT, the trend has clearly been down for the last 3 years.
stockcharts.com[h,a]wallyiay[df][pb40!f][vc60][iut]&pref=G
In looking at the weekly chart, one needs to look for clues on how to play it. What I see is that every time we saw MSFT close under $25, we saw it move back up, each time for about an $8-$10 profit opportunity before declining again.
>>> I understand what you mean about not fighting the trend, but I am not a day trader and I am not a technician. <<<
If one were to be taking a position here, because the devil made you do it, you are in fact, fighting the trend. The only way to fight the trend with consistent profitability is to trade short term. This doesn't mean day trading. This does mean holding a position for 3-4 days, or maybe a week or two at most. In order to do this successfully, one must have an understanding of some basic technical tools. Otherwise, one is peeing into the wind.
>>> Bottom line for me is buying good companies that aren't going broke at prices that in the long term can make me money. <<<
I don't disagree with this statement. I merely think your timing is wrong, that's all. MSFT hasn't shown any indication that a bottom is in. It has had some bull rallies within its bear trend, but one has to be willing to take those profits and take them quickly, or your investment falls lower and lower.
Now let's look at MSFT from a different perspective. In the next chart, take a look at those horizontal bars to the left of the chart. That green area represents the amount of buying that occurred in those various price ranges over the last three years. All of those people are showing a loss at this point. Most of those people are going to sell when MSFT gets back to their break even point. This is going to put a lot of selling pressure on MSFT as it tries to rise, when the time comes. This is why short term trading is a better strategy when buying equities at low price levels, AFTER A STOCK HAS TRADED AT MUCH HIGHER LEVELS.
stockcharts.com[h,a]wallyiay[df][pb40!i!f][vc60][iut]&pref=G
During the boom years in technology, we saw companies like DELL grow 1000% over 10 years. That captures peoples imagination. Maybe MSFT can repeat that performance going forward, they may think. The difference, in my opinion, is that DELL didn't have that overhead resistance to hold it back, MSFT does. DELL was never up in the stratosphere before making its move, MSFT has been.
The market is about supply and demand. The more demand there is, the higher prices go. The more supply there is, the lower prices go. There is a tremendous amount of overhead supply just waiting for the opportunity to be dumped into the market. This is one of the reasons why rallies fail.
In looking forward with MSFT, I wouldn't be buying here, even if I wanted to. If I did want to buy MSFT, I would wait until the war starts and then look for an opportunity to play it. I would keep a tight stop and I would look to play it short term. I don't know how short until the time comes.
All in my opinion of course. I merely wanted to share some ideas on how to play it, if that's your desire to do so.
dabum |
