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Microsoft’s RSI and Volatility Metrics after Its Fiscal 1Q18 Earnings

Anne Shields - Author
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Nov. 8 2017, Updated 10:30 a.m. ET

Microsoft’s RSI

In this final part of the series, we’ll look at another important technical indicator, the RSI (relative strength index) score for Microsoft stock. Microsoft’s (MSFT) 14-day RSI is 91, indicating that the company’s stock is heavily overbought and may fall.

RSI score helps investors and traders analyze the overbought or underbought status of a stock. An RSI figure higher than 70 indicates that the company’s stock may fall soon while an RSI figure below 30 suggests that a stock may rise soon, as it has been oversold.

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Microsoft’s ATR and volatility

Microsoft’s ATR (average true range) value is ~0.68. The average true range is useful in analyzing stock volatility trends, as it indicates periods of high and low volatility in the market.

High volatility signals substantial stock price fluctuations in the market, whereas low volatility indicates a market that is in a trading range. ATR helps traders and investors in making investment choices that are aligned with a stock’s risk profile.

Microsoft stock has a beta of 1.01, which indicates the stock’s slightly higher volatility in comparison to the overall market. When a stock’s beta is higher than 1.0, it is usually viewed as more volatile than the overall market.

Investors who wish to gain exposure to Microsoft and the application software space could consider investing in the SPDR S&P 500 ETF (SPY). SPY invests ~2.4% of its holdings in Microsoft, and it has an ~8% exposure in application software companies.

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