A Look at Microsoft’s Relative Strength and Volatility



Microsoft’s RSI

In this final article, we’ll look at another important technical indicator for Microsoft (MSFT) stock: its RSI (relative strength index) score. Microsoft’s 14-day RSI is 63, indicating that the company’s stock is approaching overbought territory, but there’s still scope for a rise in its price.

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

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Microsoft’s ATR and volatility

Microsoft’s 14-day ATR (average true range) value is ~2.4. ATR helps us analyze stock volatility trends, as it shows periods of high and low volatility in the market.

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

Microsoft stock has a beta of 1.28, which indicates that the stock is 28% more volatile than the overall market. When a stock’s beta is higher than 1.0, it’s 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 ~8% exposure to application software companies.


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