The stock is not cheap. Its p/e ratio is elevated at 36.32%. Its dividend yield is just 0.77%. If you are buying this stock because your investment advisor recommends it, please use a sell stop. The key level to hold is its quarterly pivot at $281.21.
You had several buying opportunities since March 2019. The stock has been above a golden cross since March 15, 2019, when it closed at $115.91. The 200-day simple moving average provided a buying when it was tested at $147.65 on March 13, 2020.
The Daily Chart for Microsoft
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Shares of Microsoft has been tracking its 50-day simple moving average higher over the last 52 weeks. Note the price gap higher on June 4, 2021. The stock became a play on momentum this day with the 50-day SMA at $249.56. The quarterly pivot at $281.21 was first tested on July 13. The monthly pivot for August was tested at $289.29 on Aug. 5.
The highest horizontal line is this week’s risky level at $300.84. The second and third horizontal lines are the monthly pivot at $289.29 and its quarterly pivot at $281.21. Below $281.21 are the 50-day SMA at $272.49, the 200-day SMA at $242.10, and the semiannual value level at $240.07.
The Weekly Chart for Microsoft
The weekly chart for Microsoft is positive but extremely overbought with the stock above its five-week modified moving average at $279.41. It’s well above its 200-week simple moving average or reversion to the mean at $156.34. The 12x3x3 weekly slow stochastic reading is rising at 93.66. The reading above 90.00 puts the stock in an inflating parabolic bubble formation.
Trading Strategy: Buy Microsoft on weakness to its 200-day simple moving average and semiannual value level at $242.10 and $240.07. Reduce holdings on strength to its weekly risky level at $300.84. If you have been long since March 2019 book profits at the monthly pivot at $289.29. If you’re a chasing momentum employ a sell stop below the quarterly pivot at $281.21.