NEW YORK (TheStreet) -- Over the last three weeks, Microsoft (MSFT) - Get Report has been trading in a narrow low-volume range just above key support. This area, near $45.50, includes the stock's 200-day moving average as well as a sharply up-sloping 50-day moving average.
A week after Microsoft left behind a huge breakout gap following its April 23 third-quarter earnings report, the stock ran out of steam. Since its late April high, the stock has been in a low volume drift lower. The bulls completely lost interest in the stock as May began. This trend has remained steady but a test of the 50- and 200-day moving average cross seemed like a logical level for investors to return. So far that hasn't been the case.
If the current June low at $45 is taken out, the near-term support area will be badly damaged. A further drop is likely and could be propelled by higher trade. Microsoft will then be on course for a fade down to the earnings-inspired gap at $43.60 of April 24. The $43.50 area may finally spark enough bullish interest, while shares inch toward oversold territory, to create a solid low for the stock.
If you missed the entire post-third-quarter earnings move and maintain the same positive view of Microsoft, a very low-risk entry opportunity will present itself if shares fill the April 24 gap.
This article is commentary by an independent contributor. At the time of publication, the author was long MSFT.