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Do Technical Indicators Point to a Surge in Microsoft Stock?

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Microsoft’s shareholder returns and stock trends

So far in this series, we’ve discussed Microsoft’s (MSFT) better-than-expected fiscal 1Q18 earnings, which improved the market sentiment for the stock. Let’s take a look at Microsoft’s (MSFT) technical indicators, which help traders and investors make timely market entry and exit decisions.

On October 27, 2017, Microsoft stock rose ~6.3% and 12.5% for the trailing-five-day period and the trailing-one-month period, respectively. MSFT stock had risen ~40% for the trailing-12-month period. In comparison, SAP (SAP) and Oracle (ORCL) generated returns of ~2.0% and 3.3%, respectively, in the trailing-five-day period.

Microsoft’s MACD

On October 27, 2017, Microsoft stock closed at $83.81. The stock was trading 9.0% above its 20-day moving average of $77.00, 12.0% above its 50-day moving average of $75.00, and 15.0% above its 100-day moving average of $73.00.

The chart above shows the surge in the stock prices of Microsoft SAP and Oracle. These companies are now focused heavily on the cloud, which is viewed as the key reason behind the tech sector’s rally this year.

A company’s MACD (moving average convergence divergence) is the difference between its short-term and long-term moving averages. Microsoft’s 14-day MACD of ~1.0 shows a major upward trading trend, as the figure is positive.

Investors interested in gaining broad-based exposure to Microsoft can consider investing in the PowerShares QQQ Trust Series 1 ETF (QQQ). MSFT accounts for 8.4% of QQQ, and application software accounts for ~28.4% of QQQ’s holdings.

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