Microsoft Earnings make Investors happy, oh wait.

Microsoft earnings at close of trading yesterday seemed to make investors and traders happy at first. The stock price was up +4% after-hours. However, checking back at around 7pm, I noticed that it had reversed, and the last after-hours trade was at -1%. This morning around 8:30am it is trading down -3% and the pre-markets are also down.

Most of you know that I do not trade individual stocks. But I do track the big technology stocks because they have a big impact on the overall markets.

Let’s take a look at the MSFT chart:

It is a familiar pattern that we have seen in the S&P 500 and the NASDAQ. The price is trading within a downward channel and finding it hard to come out of it. The automated thin trendline is the 150-day moving average and we can see that there is still no sign of any reversal to the bullish side.

The price has hit the 150-day moving average 3 times in the last year and failed to move past it in a meaningful way. The earnings could have been a catalyst to move it higher. But after-hours action indicates that is not going to happen.

Overall, I am positioned right now with SPY and QQQ short-term puts which should be in the money at the open today. There are 2 notes I would refer to for my expectations on the market: The first one is how the sectors are not showing strength and the second one is expectations around the SPX.

I follow the trends and do not trade based on predictions. That way I use the expected move to anticipate what my trades will be but actually put on the trades when I see the event happening. It may be confusing but, in short, I wait for proof that the market is doing the thing I expect it to do before pulling the trigger.