MSFT: wht it's not the time to short it..
hello fellow traders, i see many ideas calling for shorting MSFT - here's a quick analysis why i think this is not the time yet to do so
- this is a simple monthly
MSFT chart - showing volume with avg and the lower indicator is my own proprietary formula that tracks price momentum (not trend) - it in a way works very similar to an RSI - we set it to a long value so instead of showing the short-term strength, it becomes more of a reflection of the long term momentum or sentiment behind the stock - once we do this, what do we see?
1 - MSFT reached a level in momentum (sentiment / excitement) that was never reached before (above 75%) in the last 20 years - even though this run that started back in 2018 is not the biggest move the stock did in that period (check out the line slope) . check out the move between 96 and 99 - yeah, that was the exciting time of Win XP, Office and the early internet and mobile phone days :) -- but even then, was a faster run up and everything, the sentiment didn't hit as high as now
2 - the monthly traded volume is contracting - that's a sign that smart money are starting to control the supply (and hence the price) - and once they reach their objectives, they will start distributing the stock
3 - for such a momentum to dissipate, it may take up to 10-14 months -- look at how long it took MSFT before to lose such a strong momentum in prior runs
4 - one more reason, i already tried it :) .. i hedged my long position around $150 and now i'm stuck - i didn't really lose capital, but lost the opportunity to join the run from $150 to $180 :( .. that is the best reason i can share with you - do not do like i did :) enjoy the run if you're long, and use some trailing stops -- i now need to find a way to "hedge the hedge"
so what's the play?
- if you're long, let your position run and protect it
- if you want to get in, think of maybe using calls with a long term expiry (6+ months), in- or near the money -- i call these "the millionaire makers" cause when these are played right with stocks like MSFT and AAPL, they provide huge profits (think of those who bought AAPL January 2020 200 calls back in Q4 last year, yeah?)
- don't short now.. if you do, expect a lot of risk, and be very short term
hope this is useful, feel free to comment or share thoughts
-- good luck!
- this is a simple monthly
MSFT chart - showing volume with avg and the lower indicator is my own proprietary formula that tracks price momentum (not trend) - it in a way works very similar to an RSI - we set it to a long value so instead of showing the short-term strength, it becomes more of a reflection of the long term momentum or sentiment behind the stock - once we do this, what do we see? 1 - MSFT reached a level in momentum (sentiment / excitement) that was never reached before (above 75%) in the last 20 years - even though this run that started back in 2018 is not the biggest move the stock did in that period (check out the line slope) . check out the move between 96 and 99 - yeah, that was the exciting time of Win XP, Office and the early internet and mobile phone days :) -- but even then, was a faster run up and everything, the sentiment didn't hit as high as now
2 - the monthly traded volume is contracting - that's a sign that smart money are starting to control the supply (and hence the price) - and once they reach their objectives, they will start distributing the stock
3 - for such a momentum to dissipate, it may take up to 10-14 months -- look at how long it took MSFT before to lose such a strong momentum in prior runs
4 - one more reason, i already tried it :) .. i hedged my long position around $150 and now i'm stuck - i didn't really lose capital, but lost the opportunity to join the run from $150 to $180 :( .. that is the best reason i can share with you - do not do like i did :) enjoy the run if you're long, and use some trailing stops -- i now need to find a way to "hedge the hedge"
so what's the play?
- if you're long, let your position run and protect it
- if you want to get in, think of maybe using calls with a long term expiry (6+ months), in- or near the money -- i call these "the millionaire makers" cause when these are played right with stocks like MSFT and AAPL, they provide huge profits (think of those who bought AAPL January 2020 200 calls back in Q4 last year, yeah?)
- don't short now.. if you do, expect a lot of risk, and be very short term
hope this is useful, feel free to comment or share thoughts
-- good luck!
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