The S&P 500 touched new record highs last Friday, signaling renewed optimism in the markets. With the Nasdaq and Dow following suit, traders are beginning to see signs that the bull market is gaining momentum after a mixed start to the year.

Big tech names remain at the forefront of this rally, with anticipation building ahead of next week’s earnings reports and key Fed updates.

Amid this backdrop, Microsoft (MSFT) has emerged as a standout opportunity. The stock is consolidating near its 52-week high of $468.35, showing a textbook squeeze setup alongside stacked EMAs that point to potential upside.

In a market driven by technical setups and institutional positioning, MSFT is giving us one of the cleanest bullish patterns right now.

What’s driving this setup?

The S.A.M. AI Scannerhas flagged MSFT for squeezes on the weekly chart, as well as intraday squeezes on the 5-, 10-, 15-, and 30-minute timeframes. This multi-timeframe alignment suggests that the stock is “coiling” for a significant move, with institutional accumulation likely driving this consolidation.

In a market where precise technical setups are key, MSFT is giving us one of the cleanest bullish patterns right now.

Let’s break it down…

The Technical Picture

Squeeze Setup

Microsoft’s price action is showing a textbook squeeze formation across multiple timeframes. The stock is just below its 52-week high of $468.35, and is exhibiting signs of compression identified by the S.A.M. AI Scanner.

In simple terms, a squeeze occurs when price volatility contracts, creating a “coiling” effect similar to a spring being wound tighter and tighter. These low-volatility periods often precede significant price moves, and when they occur near major levels like 52-week highs, they can signal a potential breakout.

Currently, MSFT has:

• A weekly chart squeeze, indicating longer-term energy building up.
• Intraday squeezes forming on the 5-, 10-, 15-, and 30-minute timeframes, suggesting shorter-term momentum is setting the stage for a near-term move.

The squeeze is created when Bollinger Bands and Keltner Channels compress together, signaling that the stock is storing energy for its next breakout.

• Institutional accumulation is likely driving the current consolidation.
• A breakout above $468.35—its 52-week high—could trigger significant upside momentum.

This multi-timeframe alignment of squeezes provides us with a clear level to trade against and increases the probability of a strong move higher if the squeeze releases to the upside.

EMA Stack Analysis

• Perfect daily EMA alignment (8, 21, 34, 55): Shorter EMAs are stacked above longer ones, signaling strong bullish momentum.
• Weekly chart confirming the broader uptrend: Higher timeframes add confirmation to the setup.
• Price finding support at key EMA levels: This is a clear sign that buyers are stepping in at critical points.
• Higher lows forming across multiple timeframes: A classic bullish continuation pattern.

When we see EMAs aligned like this, it often precedes significant upside moves. This “bullish ladder” structure suggests both short-term momentum and long-term trend are aligned to the upside.

Company Outlook

Although my primary focus is on technicals, it’s worth briefly noting Microsoft’s strong position in the AI and cloud computing space:

• AI Leadership: Microsoft’s partnership with OpenAI, including its integration of cutting-edge AI tools like Copilot, positions it as a leader in the AI revolution.
• Revenue Growth: Microsoft’s cloud segment continues to grow at a double-digit pace, further strengthening its bull case.

While the stock has slightly underperformed the Nasdaq 100 over the past year (10.8% vs. 25.6%), this could set the stage for a “catch-up” move as AI adoption accelerates.

Your Action Plan

While the setup in MSFT is strong, I won’t be trading it this week as earnings are set to be released on January 29th.

Earnings events create significant opportunities but also come with heightened risks, like unpredictable price action and the dreaded volatility crush that can wipe out options premiums—even if the stock moves in your favor.

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