How many investors do you know who have all but given up on Microsoft (MSFT)? Well, walk away from that camp. Microsoft stock came back up on my radar in the early part of the summer as it showed great relative strength, and with the recent uber-bullish behavior, MSFT is front and center on my trading and watch lists.
Microsoft reported fiscal first-quarter 2014 earnings two weeks ago, and MSFT stock has been on a tear since. While Microsoft is no longer the great tech-sector indicator it once was, it still enjoys a great following on the part of traders and investors alike. Furthermore, Microsoft stock reacts well to technical analysis, and around its earnings report has a tendency to be somewhat jumpy. MSFT still enjoys some of the excitement of other tech firms … just with less volatility and somewhat more predictability.
As such, MSFT makes for a great stock to track closely and watch for trading opportunities.
On the long-term chart looking back to the year 2000, we note that this week, Microsoft stock bumped up into an area of resistance not seen since 2007. This now marks the third time during the past 13 years that MSFT has visited this level. It often is said that triple tops don’t exist, which if true — in the case of MSFT’s long-term chart — would spell out a positive future for Microsoft shares, including a move toward at least $48 during the next six to 12 months.
So, with the big picture in mind, note the beautiful chart breakouts and tight formations that Microsoft stock has left behind on its chart recently. With the post-earnings rally, MSFT’s 50-day moving average (yellow) has begun to cross above its 100-day moving average (blue). Earlier this week, MSFT broke out past a multimonth resistance area near $36.50 to fresh year-to-date highs.
Microsoft stock might well be somewhat overbought in the near-term, and some consolidation back down toward $36.50 could be needed.
Beyond the near-term, however, barring any major shift in news around the company, MSFT looks poised to move higher.
Learn more about the strategies Serge Berger uses to create profits in the market every day. Download his trading plan in the “Essence of Swing Trading” eBook by clicking here. At the time of publication, Berger owned stock in Microsoft.
