Shares of Microsoft Corporation (NASDAQ:MSFT) have been on fire. They are trading at all-time highs. But they are also overbought.

This could be a warning signal.

Overbought means the shares have reached an extreme above what would be their normal or typical trading range. This condition brings sellers into the market because they will be expecting a return to the average.

The last time the shares were as overbought as they are now was in February 2020. This was right before the COVID-19 crash.

Of course, MSFT crashing as it did then is unlikely. But there’s a good chance there is some profit-taking and this could pressure the shares.

Photo: courtesy of Microsoft.