Dow component Microsoft Corporation (MSFT) is trading within a few points of February’s all-time high at $190.70 and could be released in the coming weeks, entering into a sustained trend advance, with a measured target above$ 240. It has already raised in the second location in Dow relative strength, just behind Apple Inc. (AAPL), noting the continuing interest of buyers in spite of the pandemic and the weakening of the feeling triggered by the recent protests and looting.
The company has benefited from a huge wave of cloud indicators in the first quarter as a result of compulsory stay-at-home orders, with impressive gains in video-conference, games and other popular apps. Extensive use has continued in the second quarter, bodes well for Microsoft in the next generation of mainstream software products, including Microsoft 360 and Windows Base operating system.
The stock four-year trend during the first quarter swoon, maintaining its bullish long-term outlook despite the technical damage in all across the market of the universe. Monthly relative strength readings are now higher, indicating that the bulls have taken the long-term control of the price action. However, the increase may be in need of a catalyst to the upside or improvement in a wide sense to get investors off the sidelines and into new positions.
In spite of the recovery, Microsoft could struggle with commercial sales of products in the coming quarters due to shot down the clients are likely to reduce information technology (IT) budgets to cope with significant shortfalls. IT spending tends to present traditional cyclical properties, with a spending increase during periods of economic expansion and lower expenditures during recessions and recoveries. This headwind could at the end, the development of the bullish trend.
MSFT Long-Term Chart (1990 – 2020)
A multi-year advance, fenced, close to $60 in December 1999, which represents a top that was not in question, for the next 16 years, before falling after the internet bubble burst in 2000. The decline stretched over 60% by year-end, whereas, in 2001, a bounce to the low $30 marked the highest for the next six years, ahead of 2002 and 2006, tests at the low of 2000. 2007 escape has added three points, before declining in a bearish trend that broke the 2001 low during the economic collapse of 2008.
A rebound in the new decade took four years to complete a round trip in the record time of 2007, the immediate sale of derivation that, originally, above $50 in the fourth quarter of 2014. The bulls have regained control a year later, completing the last rally leg in 1999, just before the election of 2016. The price action is then entered in a narrow rising channel, highlighting growing institutional buying pressure after years of stagnant performance.
MSFT Short-Term Outlook
The rally took a break in 2018 and recovery in 2019, to break above the prior high of $116 in March, which gives the most prolific of the gains so far this century. The slight increase in the number recorded a record high of $190.70 in February 2020 and rolled over in a vertical drop, followed by equally vigorous rebound that clinched three points below the prior high in May. The stock has been consolidating at this price level for the last three weeks, waiting for the catalyst needed for a breakout.
The monthly stochastic oscillator renewed in February 2020, by entering into a cycle of selling on the level of overbought. That the sale of energy dried up at the end of March, the abandonment of the bearish signal, while generating a new bullish cross. Stiff tailwind remains in force as we head through the last month of the second quarter, indicating that the bulls remain firmly in charge in the long-term share prices, despite the strong current.
The Bottom Line
Action Microsoft has taken February resistance and could come out in the next few weeks, the seizure of a new trend advance.
Disclosure: The author held no securities in the aforementioned securities at the time of publication.