Microsoft Corporation (MSFT) - This stock mirrors the recent price history of the broad stock market.
Click to Enlarge
This chart is a study of the current market condition with a huge double top, a penetration of a significant support line at $28, and a recent history of high volume on down days and low volume on up days.
But its chart also shows a trading buy signal from the stochastic indicator, telling us that a rally to its recent support line (now resistance line) at $28 could occur before turning down again.
Traders may want to take speculative positions in call options now to capture a two-point trade, but they will want to put a stop-loss order just under $24.
Short sellers should be alert to a possible breakdown at $24 with a target of $22 or possibly even $20.
By Sam Collins of OptionsZone.com
