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Microsoft (MSFT) Stock Update

6 June 2006 2,466 views 6 Comments

Last week, we were watching Microsoft’s stock and hoping it could break through the resistance level at $24. If it did that, the stock was set for a nice break into the mid-to-high twenties. Instead, the stock dropped along with the general market and tech sectors. Closing price yesterday was around $22.50.

The chart above is from our secret BusinessWeek page (I can’t ever find this from the main navigation at BW) showing a 3-month chart of the stock with a 10-day moving average line, stochastics, and MACD indicators. The green arrows indicate typical buy signals according to the specific technical indicator it covers, and the red arrows indicate typical sell signals. It’s a pretty nice chart to use for quick checkups, when you don’t want to strain your brain too much.

Of course you shouldn’t rely solely on these indicators to make your investment decisions. (For more information on these charts and arrows, please refer to Chris’ article on the subject.)

The thing of note about MSFT right now is that it has the tendency to push above the 10-day moving average, which would indicate a buy. However, instead of running up like it’s supposed to, recently the stock has been bouncing off the longer trailing MAs (like the 30-day MA) and sinking lower. My call: be wary of this stock until it crosses a more substantial MA level. If you are a conspiracy theorist, you might be interested in Phil Town’s discussion on “bear traps“. The theory is that institutional investors will run up a stock’s price to the just over the 10-day moving average in order to lure buyers in and subsequently sell off much a larger chunk of their position.

Here’s some reading on Microsoft:
- Google Spreadsheets Turns up Heat on Excel by Elinor Mills (CNET)
- New Microsoft Employee Buying up Company Stock by Jack Krupansky
- Past InvestorGeeks Articles on MSFT

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6 Comments »

  • Brian said:

    You know with Google invading MSFTs Office Product territory things could get interesting for MSFT. Windows Vista will be a nice product coming but in coming years their offices products might not have the power they do now. If MSFT starts losing office revenue to Google they might become an even slower growth company and their stock price might continue to stagnate over the next few years.

    # 6 June 2006 at 1:05 pm
  • Jason (author) said:

    It’s really interesting how we have these two companies who are giants in their own markets (Desktop Software for Microsoft and Search and Internet Services for Google) duking it out for each other’s business.

    What could the outcome be? It sounds like the sort of thing you would want to stay away from until a “winner” could be named.

    Maybe the winner is Yahoo! (who I own right now) who will benefit from MSFT and GOOG’s lack of focus. On the PC side, Apple might be a winner as Microsoft loses focus.

    Of course if either Microsoft or Google’s attempts to expand their markets works out, they will be the winners.

    # 7 June 2006 at 8:27 am
  • Christopher Gragsone said:

    The problem with Google getting into the Office Arena is that Microsoft did more than just build a few WYSIWYG tools. Its the VBA addons that make office more then a 10 year old piece of software. Microsoft has always made a large chunk of their profits from selling developer tools. While Google will no doubt be able to “make Office”, it will probably be just as successful as Sun’s attempt with OpenOffice.

    On the other hand, Google has been doing well with sharing their Ajax APIs with developers. It’ll be interesting to see an Ajax Office system. I just hope they add the changes to their Blogger as well.

    # 7 June 2006 at 8:27 am
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