The Microsoft Company (MSFT), which has beaten the earnings per share (EPS) estimates when the company reported results after the close on 22 July. The stock was above its monthly value level of $205.19 when the results were published. The software giant and component of the Dow Jones Industrial average opened on the 23rd of July, above the monthly pivot, then fell below this key level. However, the stock remained above its semi-annual and quarterly pivots at $196.79 and $196.71.
Microsoft stock closed on Monday, July 27, at $203.85, up 29.3% year to date, and in the bull market territory at 53.8% above its March 23rd low of $132.52. It is also 5.8% below its record high of $216.38 set on 9 July. Basically, the Microsoft stock is overvalued with a P/E ratio of 35.01 and a dividend yield of 1.01%, according to the trends.
This tech giant offers a wide range of products and services: operating systems for Pcs, servers, phones, software in the cloud, video games, and online advertising. Microsoft is also the owner of LinkedIn, which is a big problem, because the redemption of the social media platform has started on a per-share profit streak of 17 consecutive quarters.
The daily chart for Microsoft
Refinitiv XENITH
Microsoft stock has been above a cross of gold, since March 15, 2019, when the 50-day simple moving average rose above the 200-day simple moving average, indicating that the increase in prices to come. This follow-up of the stock at its Feb. 11 of $190.70. From this high, the stock has decreased by 30.5% to a low of $132.52 set on 23 March.
After reaching a low this low, the stock has increased from 63% to its intraday high of $216.38 on 9 July. In the bass, the action Microsoft held its annual value level of $136.42 between the 16 March and 23 March.
The stock moved above its 200-day simple moving average on the 25th of March and above its 50-day simple moving average, the 13 April. This follow-up of the stock to its intraday high of $216.38 set on 9 July.
From the top, the stock remained above its semi-annual and quarterly pivots at $196.79 and $196.71. Microsoft is currently below its monthly pivot at $205.19, and its weekly risky level at $214.93.
The weekly chart for Microsoft
Refinitiv XENITH
The weekly chart for Microsoft is neutral, above its five-week modified moving average of $198.57. The stock is well above its 200-week simple moving average, or the return to the average, to $110.50. The 12 x 3 x 3 weekly slow stochastic reading is expected at the end of the week to fall below the overbought threshold of 80.00 with a reading at 79.26.
Trading strategy: Buy Microsoft stock on the weakness of its semi-annual and quarterly pivots at $196.79 and $196.71. Reduce the holdings on the strength of its weekly risky level at $214.93. The monthly pivot at $205.19 must be a magnet.
How to use 12 x 3 x 3 weekly slow stochastic readings: My choice of using 12 x 3 x 3 weekly slow stochastic readings has been based on the backtesting of many methods of reading the stock prices of the momentum with the objective of finding the combination that resulted in the least number of false signals. I’ve been following the stock market crash of 1987, so I was happy with the results of more than 30 years.
The stochastic reading covers the duration of 12 weeks, high, low, and close for the stock. There is a row of calculation of the difference between the highest and the lowest compared to the farm. These levels are modified for a fast reading and slow reading, and I found that the slow playback will work best.
The stochastic reading scales between 00.00 and 100.00 with readings above 80.00 considered as overbought and readings below 20.00 regarded as oversold. A reading above 90.00 is considered to be a “swell parabolic bubble” of the training, which is usually followed by a decline of 10% to 20% over the next three to five months. A reading below 10.00 is considered to be “too cheap to ignore,” which is usually followed by a gain of 10% to 20% over the next three to five months.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Source: investopedia.com
