Microsoft Bulls Have Created Some Breathing Room

Earnings or election? Which will matter more?

In my book, numbers matter most. Unless one party wins the U.S. House, Senate and White House with a dramatic unanimous majority, the election results aren’t likely to have a major impact on the direction of the market in 2025. But we’ve already started to see an impact from earnings.

Expectations are high for chip- and AI-related names. Microsoft MSFT reports next week. I highlighted some risk in the technical setup, but bulls created some breathing room for themselves yesterday with a 2% move higher, tacking almost $9 onto the price. Another $5 would put shares a few bucks above $430 and create additional support heading into earnings. That may be enough cushion above the $410 to $415 area that lessens earnings risk.

Dell Technologies DELL is another name in the tech sector that shows risk into its earnings report next week. The stock struggled on Tuesday, closing on its two-month support trendline. The stock also closed below its 10-day and 21-day exponential moving averages (EMAs). The 10-day EMA remains above the 21-day EMA, but a few days of weakness could change that.

After the surprising huge move higher post-earnings in March, the stock has struggled after its last two earnings reports. If $120 fails, I wouldn’t be interested in a long-side play until we test $100, possibly even $10 below that.

Gold continues to push higher with only minor pullbacks. The SPDR Gold Shares ETF GLD has only one red weekly candle over the past three months. As long as GLD remains above its 21-day EMA, I have no interest in being bearish. In fact, I would consider adding to GLD on a retracement to the 10-day EMA or a bounce off the 21-day EMA. The EMAs are only $2 apart, so I would lean toward the 21-day EMA bounce for the better risk-reward scenario.

At the time of publication, Byrne had no positions in any securities mentioned.