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The powerful breakout that followed Microsoft's (MSFT) - Get Microsoft Corporation Reportearnings report on Friday drove the stock more than 10% higher. This huge ramp began with a massive upside gap, Microsoft's largest in years. The stock reached new all-time highs in the early-going on Friday and again on Monday. Although this is quite an accomplishment, further upside may be difficult without a healthy consolidation.

In the near term, it's very likely that the $53-to-$54 area will slow the new bull leg that began earlier this month. This key resistance zone includes the stock's 1999 and 2000 highs. Considering that Microsoft is now up 35% from its Aug. 24 low and has surged more than 22% off this month's bottom, a return to the old high offers bulls a very attractive profit-taking opportunity. In addition, the stock has now returned to an extremely overbought reading in its moving average convergence/divergence.

Over the next few weeks, investors should expect a healthy consolidation to develop. To maintain its impressive bull run, Microsoft will need a rest soon before convincingly taking out the old highs. This does not necessarily mean that the stock will need to pullback in a meaningful way. It will more likely see a period of sideways action while it works off some of the current frothiness.

Investors should keep a close eye on the last Friday's low of $52.25. In the near term, this is a key level. A hold here followed by the construction of a bullish pennant or flag would be a encouraging event. Until then, it may prove wise to stand aside while Microsoft digests its recent breakout.

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Disclosure: This article is commentary by an independent contributor. At the time of publication, the author was long MSFT.