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