Every Sunday, we will go through our list of dojis for the week and see
if there is one stock worth taking a look at. This will not be any
recommendation to buy or sell. Instead it will be more of a recap of how
the stock performed after the doji alert was posted.
This week's analysis is going to focus on Microsoft (MSFT) which was alerted on June 23rd, 2020. Below is the week ending chart for MSFT.
On June 22nd, Microsoft broke the psychological price ceiling, 200. After hitting a milestone, the following trading days will be critical to seeing if the price level can be sustained for continued upward push. The factors that would fuel a continued bull run would include bullishness from the NASDAQ 100 index, the technology sector (the FAANG stocks), and an increase in volume from June 22nd.
Microsoft makes up to 11.6% of the tech heavy NASDAQ 100 ETF QQQ. The QQQ ETF was showing a candle that was very close to a doji candle on June 23rd as well. This would indicate that the NASDAQ could be approaching a reversal of the upward trend the market was experiencing. The next check is to see how the tech big boys are doing on June 23rd: Facebook, Amazon, Apple, Netflix, and Google. Looking at the stock charts for the FAANG stocks, Facebook, Apple, and Netflix both show a pull back after making a 52 week high. Google and Amazon did not have a clear pull back for trading that day. So not a clear hint for a pull back.
On the topic of volume, Microsoft did not over take the volume it had on June 22nd. On June 23rd, MSFT had 30.8 million shares traded, compared to 32.8 million shares traded the day before. While the difference is not truly significant, this again is another hint that there was some weakness in the push over the 200 stock price.
So given the simple checks after getting flagged as a doji, Microsoft had some reasons going against the stock price to continue higher. This analysis took a step back from just looking at the stock only. First by taking a look at an ETF that held a large percentage of Microsoft stock, we are able to see how the peers of Microsoft performed on June 23rd. Then by looking at the other major players in Microsoft's sector, we gauged how credible a possible pullback could occur. Finally, after going through the comparisons with other stocks, we took a focus on Microsoft's volume after crossing the 200 price mark.
Microsoft is a strong company that has been making great moves to help it have reason to be priced over 200. This, however, does not mean the company is currently ready to be priced at that level. The possibilities going forward is that this pullback from the high will be a short-term pullback and then roar past this high in the future, or this will mark the 52 week high for the next 52 weeks going forward. We have to wait and see.
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