Powell is speaking later this morning, and we’ll see whether he sticks with the usual “data-dependent” remarks or offers any new guidance on future monetary policy.
No matter what he says, the time and price factors are beginning to align.
Yesterday, the Global Dow reached a new record high, though we did see a pullback before the close. However, stock futures have since rebounded. We’re either looking at a more substantial wave 4 correction today or early next week, or yesterday’s dip was a brief wave 4, and wave 5 could be kicking off right now.
Microsoft (MSFT) is particularly noteworthy, as it’s showing negative divergence from the broader tech sector, something we haven’t seen in years, even though the Nasdaq remains strong.
Here’s a chart to keep an eye on…
I’ve marked a wave count from the early August low. If yesterday was indeed the wave 4 low, then wave 5 should be on the way. The issue is that MSFT is struggling to climb back above previous support levels (indicated by the lower black trend lines), and there’s a significant Fibonacci confluence zone around the $440 level (red 5). It’s possible we might see a sharp rise above this zone next week.
But if MSFT hits a lower high just as the Nasdaq, semiconductors, or other key tech stocks reach new highs, this could be setting the stage for a major market turning point and likely a significant reversal. For those who follow traditional technical analysis, this might be the setup for a “head and shoulders” pattern at the top, coinciding with key time factors.
I’ll be closely watching MSFT as we approach next week. Let’s see what Powell has to say…