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April 22, 2005
The Microsoft Key
For clues on the Nasdaq, I am turning to none other than Microsoft (MSFT). In addition, MSFT will play a big part in the success or failure of the Software HOLDRS (SWH).
On the price chart, the stock retraced 62% of the Mar-Dec advance with a decline to around 24. This is normal for a retracement and support is reinforces by the Aug-Sep lows. More importantly, the stock is starting to attract upside volume (green carets) and shows good relative strength. While the Nasdaq moved to new lows in early April, MSFT held above its late March lows. The stock advanced sharply on above average volume on Thursday. This was a catalyst type move and further strength above 25.5 would confirm. A move below the late March low (23.8) would be bearish.
Posted by Arthur B. Hill at April 22, 2005 02:43 PM