2016 has not been the best year for Microsoft (NASDAQ:MSFT) stock so far. At the end of December 2015, it climbed to as high as 56.82 dollars a share, but has been declining ever since.
Last week Microsoft fell to 48.01, which means the stock lost 8.81 dollars per share in six months time. The good thing is that this weakness did not come out of the blue for Elliott Wave analysts.
The chart below was included in “Microsoft Might Disappoint in 2016”, which we published on December 28th 2015 in order to prepare our readers for the upcoming pullback.
As visible, by applying the Elliott Wave Principle to the weekly chart of Microsoft stock, we came to the conclusion the bears were ready to step to the stage and cause a plunge in wave (4) to the south.
The above-shown analysis made us believe “the stock could be expected to lose nearly ten dollars a share, before the bulls return”. More than six months later, let’s see how things have changed for Microsoft stock.
It did not lose ten, but 8.81 is close enough. Another good call made possible with Elliott Wave analysis. Wave (4) appears to be a w-x-y double zig-zag correction, which seems to be over at 48.01.
According to the theory, trends move in five-wave sequences, called impulses. As the updated chart shows, Microsoft’s fifth wave is still missing. If this is the correct count, the bulls could be expected to return from now on and take the price of the stock above the top of wave (3) at 56.82. The area around 60.00 looks like a good bullish target.