Chart of the Day - Monday, September 9, 2024

By Patrick Dunuwila

September 9, 2024
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Chart of the Day
 


🏆 Today's Chart of the Day was shared by Jake Wujastyk (@Jake_Wujastyk).
 

  • Microsoft ($MSFT) has rolled over into a *potential*  Head & Shoulders Top over the past six months. The neckline of this bearish pattern is around $400. A breakdown would target the prior cycle highs, around $340. 
     
  • $MSFT is the second-largest stock in the S&P 500 and Nasdaq 100. Semiconductors ($SMH) have also rolled over into this bearish pattern. The major indices will struggle if $MSFT and $SMH break down, but...
     
  • As Jake points out, this textbook pattern is glaringly obvious. It's just a matter of time before everyone and their mother sees this thing. Chart patterns often fail when they become too obvious, and it's extremely bullish when bearish patterns fail. 
     

Takeaway: Microsoft ($MSFT) has rolled over into a textbook Head & Shoulders Top with a neckline of around $400. Semis are also exhibiting this bearish pattern. Bulls can't afford to lose pillars of the Tech sector like $MSFT and $SMH. But if these topping patterns fail, it could spark the next leg higher for the Tech sector. 

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Patrick Dunuwila

Editor, The Chart Report

Patrick Dunuwila is the Co-Founder and Editor of The Chart Report, a popular technical analysis newsletter read by thousands of investors worldwide every day. Patrick is a Chartered Market Technician (CMT) with over a decade of market experience. Prior to launching The Chart Report, he worked as a proprietary trader at Benchmarq Technologies in New York City. He's originally from Syracuse, NY, and currently resides in San Diego, CA.

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