Microsoft (MSFT) reported downbeat FQ4 earnings and gapped down on July 19th, 2013.
GAP REVIEW
On July 19th, 2013, MSFT gapped down taking out the $32.60 area pivot of support / demand. This produced a move to the downside where MSFT traded over 250 million shares. Big volume gap down days that trend lower all day on institutional volume show you that bigger players are no longer supporting this stock at these levels.
KEY LEVEL
First key level to note is the overhead supply level at $32.65. If the stock tries to rally into $32.65 you should observe to see if there is confirmed supply. Also on the weekly chart there is some minor demand at 31.00. The break of support on the gap down should produce more downside action. Bigger support / demand levels exist at 29.00.
THE TRADE
Short any rally with confirmed price rejection into $32.65, or short a break of 30.99 with stop over $32.65. Your target would be into $29.00, and then into $27.00.
