The 74 level is where a large cluster of institutional money waits. The market reacts to these levels. Therefore, even before 74, smaller institutions and individuals jump in, expecting that since 74 is a "floor" of sorts, it pays to get in before the big guys start buying at 74 and it quickly moves up. That is why it may never get as low as 74. OTOH, there are many events that influence the market, and are not accounted for in TA. You can have some crazy external factor (war, FED rates, economic news, DOJ trial etc.) - and suddenly huge pressure is brought to bear - it hits 74, institutions buy, but the market sentiment is so negative, that it overwhelms the buying pressure. 74 is just a few points above where MSFT stood at the beginning of the year. An investor can take two tacks here. He can sell - to preserve at least SOME - profit for the year... and that is how you can get 74 support to break (if enough people take this route as a result of panic, or external concerns). Or the investor can reason: gee, this is very close to the bottom, as it would wipe out all gains MSFT made this year, and since MSFT never ends up negative for the year, it's a good point to get in, as it's probably the bottom (basically in keeping with institutional buy models)... in which case 74 holds.
Support and resistance levels are set by many factors, and their strength needs to be continuously re-evaluated as conditions change.
Thus far, I still see support at 74, and very strong support at 67 1/2. All IMHO, of course. |
