I bought a chunk of Microsoft (MSFT) stock at $25. At the time, my thinking was “why does MSFT have a PE below 10”? While a stock like AAPL is priced for perfection (which they keep delivering), at a 10 PE Microsoft was priced for mediocrity… and it’s been treading water it has for the better part of a decade.
We’re now moving toward that $35 level where it’s had trouble in the past. All MSFT needs is a break out product to bust through that level and reach toward its former glory at the $40 and $50 levels.
But don’t get me wrong, I know what company we’re talking about here. Microsoft hasn’t been able to succeed Apple-style with any of their recent products launching in new categories. The stock has been bouncing between $25 and $35 for a while. Short something miraculous happening for the company, I’m looking for queues to sell.
Above is a six month chart. You can see how the top trend there has been broken. The stock is holding up at the 50-day moving average which lines up with that second trend line I drew. Support exists at $30, $28.50, and the 200-day MA at around $27.50.
The long term picture. If MSFT holds up above $30, look for it to test that $35 range again. If it drops below $30, look for it to trade back down to $25-ish level.
Update: I put a stop in at $30.97 and had my stake sell out the other day.