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Asset Watch

Could Microsoft excel?

 

Tuesday, September 20 2022

On Sep. 15 FedEx CEO Raj Subramaniam painted a dark portrait of the global economy when he said, “we’re seeing volume decline in every segment around the world”, adding “the economic conditions are not really good.”

 

His comments came at a time when negativity was already sky-high across the financial markets. However, while Microsoft has underperformed the S&P 500 over the last month, could short-term support be on the horizon?

The S&P 500 declined by 0.72% on Sep. 16, while Microsoft only declined by 0.26%. Microsoft’s intraday low on Sep. 16 was $242.06, which is near the June low ($241.51) and the March 2021 high ($241.05). Likewise, the May 2021 low ($238.07) isn’t far behind. Therefore, with Microsoft closing the Sep. 16 session at $244.74, the computing giant could be near an inflexion point.

Additionally, Microsoft’s daily RSI hit 29.77 on Sep. 6 – its second lowest level in 2022. But even though the stock has closed at lower lows in recent days, its RSI has not. As a result, the positive RSI divergence highlights how the current selling pressure has been less intense than in the prior episode. Furthermore, a diverging RSI is often a precursor to a reversal.

So, will Microsoft reward the bulls over the next few weeks? Or is it better to proceed with caution until the weak September seasonal period ends?


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