Microsoft is like the brother/sister to Intel. Microsoft makes the software and Intel the hardware, both companies have been able to operate as virtual monopolies and have been able to extract profit margins of 40+% for years. Both are vulnerable to changes. The charts are very similar. In the case of Microsoft the triangle (wave 4 of c of B) is very, very distinct, it even has the additional four legs f,g,h and i. For that reason the stock should fall back to $22. If the large B-wave is correct, $10 is not out of reach. (see previous blog). All charts enlarge with a click and can be moved, for instance if you wish to compare MSFT with INTC

Both charts are essentially the same. I like using two in this case as one sort of confirms the other. They can , as always, be enlarged by clicking on them.

Clearly there is a triangle in here somewhere. On rare occasions these structures that normally have 5 legs, a,b,c,d and e, add another 4 legs to make it an a-b-c-d-e-f-h-i.  This one is rather accurate. As triangles only exist in 4th or b-wave positions it has to be one or the other. In this case, being totally out of proportion with a wave 2 if one can even find it, chances are that this is a b-wave in an a-b-c , that is making a large B-wave from the lows. If c should equal a we would get to about $42 which would exceed the double-top level of $37 which normally does not happen. If , on the other hand, c climbs to 0.618x a it would target roughly $34, which also just happens to coincide with the size of the “mouth” of this triangle.

We have no idea what the right number is but the max is about $37, reasonable is $34 and in the end the stock almost invariable drops back to at least the lowest point of the triangle, about $23. So in reality the choice is  between $3 to the upside and $11 to the downside. An easy choice.