Microsoft Corporation MSFT was edging lower in the premarket Thursday after a bearish day on Wednesday saw the stock close to 1.26% as it continued its downward trend.
After the stock was rejected from the 200 day Simple Moving Average SMA on Monday and Tuesday, the bearish pressure came into Microsoft after it fell below the level on Friday.
The 200 day SMA is an important bellwether. Technical traders and investors consider a stock trading above the daily chart to be in a bull cycle, whereas a stock trading under the 200 day SMA is considered to be in a bear cycle.
The 50 day SMA plays an important role in technical analysis, especially when paired with the 200 day day. When the 50 day SMA crosses below the 200 day SMA, a death cross occurs whereas the 50 day SMA crosses above the 200 day mark.
Microsoft Chart: unlike the S&P 500, which formed a golden cross on February 3, many big-cap tech stocks, including Microsoft, have failed to trade above the 200 day mark for long enough time to cause the 50 day SMA to cross above the 200 day mark. The bullish cycle in the S&P 500, which lasted from Jan. 6 to Feb. 15, could be over, and that was a warning that it was coming to an end.
On Wednesday, Microsoft printed a bearish Marubozu candlestick, which indicated lower prices would likely be seen on Thursday. Microsoft will eventually print a bullish reversal candlestick, such as a hammer or doji, which could indicate that a local bottom has occurred and a bounce is in the cards.
Microsoft is trading in a steep downward trend, printing a series of lower highs and lower lows. The stock's most recent lower high was formed on February 27 at $252.82 and the most recent confirmed lower low was printed at the $248.10 mark on February 24.
On Wednesday, Microsoft was looking to open under the 50 day SMA, which is bearish. Like the 200 day SMA, the 50 day acts as a heavy area of support and resistance and bullish traders will want to see the stock regain its 50 day status.
Microsoft has resistance above $249 and $256.84 and support below $243 and $238.42.
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