Chart of the Week: Microsoft
This week we are going to be profiling big software company Microsoft. MSFT is the symbol here, so let’s take a look at the chart here and see what I was looking at more recently and it got me a little bit more bullish on the stock.
As you can see here, the stock was making a series of lower highs and higher lows over here. And it was last week when the stock bolted out on really strong turnover over the last few days of the week. And it bolted higher and broke that symmetrical triangle here on higher volume. That’s what we like to see. And we followed through with a strong bullish bar, too. That in and of itself creates a nice bullish condition here for the stock.
Indicators are positive
We see also that the MACD is on a buy signal crossover here. And it’s confirmed it the last couple of days.
We also see the Chaikin money flow has been very very strong. We go to the bottom here – the Chaikin oscillator is showing a nice improvement in accumulation versus distribution. What does that mean? That means big institutions are buying the stock hand over fist. As long as we see that Chaikin money flow strong and that Chaikin oscillator at the bottom here starting to improve, that makes a huge difference.
Finally, we’ll look at the ADX indicator, which is the average directional movement. We also have the direction plus and negative in there. What does that mean? Basically we are really plotting this black line here over a 14-period move. It was slanting downward, which means the average directional movement was starting to stall. And we can see that actually on the picture of the price chart. We see this really strong move up in November and a stall out in price advancing in December – we kind of basically went sideways. Now we started up again, and you can see how that average directional movement has turned up here.
We can also see that the ADX – the DI of the average directional movement – the plus DI is also on the top here. What that tells us is this: The DI plus is in the positive, it means it’s a directional move to the upside. The ADX in and of itself doesn’t give you the actual direction just the average movement. But we know when the plus DI is on top, which it is right now, that means that directional movement is in the bullish camp here.
Microsoft could get up to $400 – maybe higher
This is a strong stock here. We think the stock has some room to get past $400 here in the short term, maybe $405-410. We have some calls on it. We also have some stock in the portfolio.
Take a look at Microsoft here – a big cap name, a mega-cap name. This may be taking over Apple as the number one market cap company in the world very very soon.
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