Buy Microsoft shares? / Analysis - Technical situation of the share

The Microsoft share in the technical analysis taking into account an overall market assessment. Buy the Microsoft share now.

US equity market on the upswing

Currently, the stock markets are quite difficult to understand for the stock marketers. There is usually a bullish scenario towards the end of the year. This seems to be working well in the US markets, while the DAX is still at a standstill. In order for German stocks to rise, it is imperative that US stocks continue their upward movement.

Shares in the Trump muddle

Since November 7, 2016 the conditions for this are not bad. The current stock market swing can be linked to Donald Trump's presidential election. Strange, and therefore particularly bullish, is the fact that Donald Trump surprisingly won. Most stockbrokers were caught on the wrong foot. Trump's views and policy goals don't actually stand for a long-term increase in stocks. Too often it was stressed that he wanted to terminate trade agreements, for example, and to promote protectionism in the US economy. However, many examples in economic history show that protectionism is not a tried and tested means of generating economic growth in the long term. On the contrary, any obstacle to free trade sooner or later turns out to be a mistake.

Stock exchange traders preferred Hillary Clinton's choice, so the surprise of the election should have led to falling prices. The opposite was the case. In return, the stock prices rose, which speaks for the bullish sentiment of the stock market.

Bullish survey of the AAII

The bullish tendency confirms the survey data of the AAII (American Association of Individual Investors)

Bullish 46.7%

Neutral 26.8%

Bearish 26.6%

The high proportion of bulls can soon become Become a problem. The bulk of buyers may have already bought. As a result, follow-up purchases would be missing. Incidentally, this is also a problem that the DAX currently has. The extreme bullish mood keeps the DAX at its resistance zone. New buyers are needed to overcome resistance. These can only be market participants who were previously bearish or were reluctantly neutral.

Image: Weekly chart of Dow Jones Industrial

At Advance Decline- Line (ADL) calculates the difference between the rising and falling shares. Basically, every movement of the index should be confirmed by the indicator. If there is no confirmation, this means that the majority of the shares are behaving differently.

The important part of the chart is framed in blue. If you compare the recent upward movement with the ADL, you can see that the internal structure of the index could not quite follow the share prices. While the Dow Jones makes one new year after another, the ADL is clearly behind. However, one should not judge too hard. The momentum is good and the ADL may be able to increase. After the strong price wave, it is very unlikely that a sharp correction will follow. Rather, there is likely to be another upward wave. A countermovement is not expected until the end of the year.

Trend analysis of the largest Dow Jones companies (Mighty Five)

Short-term = trend analysis of the past 40 days Medium-term = trend analysis of past 40 weeksLong-term = trend analysis of the past 40 months

Table: Dow Jones Mighty

The table above shows the largest companies in Dow Jones Industrial by market capitalization. These companies are extremely important to assess the growth potential of the US stock market. It is immediately noticeable that none of the companies is in a downward trend. The table above shows the trends from three different time frames. Three of the companies show a pronounced upward trend that should continue in the coming months. It is usually the case that a trend of at least two time frames should be confirmed. Specifically: General Electric, J&J and Microsoft are particularly attractive when you speculate on a year-end rally.

Among these three top stocks, Microsoft stock is the trendiest.

Microsoft in focus - buy shares?

Most people only know Microsoft as a provider of the Windows operating system and the standard software MS Office. In recent years, the company has built up a much more stable business base. This was absolutely necessary because the standard software is a cash cow, but with limited growth.

The latest good quarterly figures show that Microsoft has another lucrative division with the cloud operating system. Under the "Microsoft Azure" brand, IT users can work more productively. Azure contains many tools and ready-made templates to make web services or mobile apps faster or to give more functions.

Furthermore, the takeover of the LinkedIn career network creates a new source of income. However, Microsoft had to dig deep into their pockets to do this, as the acquisition is worth $ 26 billion.

Microsoft is well positioned for the future, so further growth is very likely.

Microsoft Business Figures

Microsoft201220014201520162017Revenues737507765486729929729207194033Results before St.222672705227820185072761228569KGV15,313.3915.8929.83181>920.413<13 in $ 100 111> Figures for 2016 and 2017 are estimates

Image: Weekly chart of Microsoft shares

How can you spend a minute?

The technical Situation of the Microsoft share

As already indicated, the share shows a stable upward trend. There was a volatile consolidation phase between 2015 and mid-2016. This period is now the basis for further price increases. An important price mark is $ 56. The share outperformed in July 2016 and has not fallen since. This indicates that market participants are not ready to sell.

Short-term slowdown in price progress

A Bollinger band has been placed around the prices within the chart. The width of this band shows the volatility of the price. In the most recent three or four weeks, the band has tapered. It indicates that the fluctuation range or the upward momentum is becoming somewhat smaller. This is confirmed by the RSI. A rising triangle can be drawn within the RSI. The RSI is not yet in the overbought area. So there is no overheating, and the share therefore has good upside potential.

Market participants' willingness to buy should not diminish this. On the contrary, every small reset can be seen as a new entry opportunity.

The initial technical situation is bullish and stable. However, as a trader, it is advisable to be prepared for all situations. The technical picture changes as soon as the price drops below $ 56. In order to have some buffer, the stop loss is set at $ 53.50. There is a massive support area between $ 50 and $ 56. Should the price dip into the zone, there will likely be an extended sideways movement. However, an end to the upward trend is only conceivable below $ 50.

Microsoft shares: WKN: 870747 or US symbol MSFT

Price target: $ 69

Stopover: $ 64

Stop loss: $ 53.50

Trading information:

If you If you want to benefit from the short-term stock recommendation, you can buy the stock directly or work with derivatives. Note that derivatives include leverage and therefore increase the profit and loss potential. In extreme cases, a total loss is even possible.

Stop loss: The stop loss is initially set as an initial stop and has the function of a maximum loss limitation. Price target: The price target is the exit point for the forecast market movement. Stopover: When the stopover is reached, the position is in profit. At this point we take a partial profit and we sell 50% of our position. At the same time, the stop loss is adjusted to the personal entry price. This enables us to close our position without loss, even if the market later turns against us.

Risk warning: The trading values ​​recommended by Christian Lukas are usually speculative. As an investor, you should always be aware of the risks. Despite careful research, it can happen that the forecast does not match the actual development. It is expressly warned not to spread the investment funds over a few securities. Due to the speculative risks associated with securities investments, securities purchases should generally not be financed on credit.

As a precaution, we would like to draw your attention to the fact that the financial analyzes and recommendations on Christian Lukas contained in individual financial instruments provide individual investment advice from your Cannot replace investment advisors or investment advisers. The analyzes and recommendations are aimed at readers who are very different in their investment behavior and objectives. Therefore, the analyzes, such as the analyzes for "Buy Intel Share" and "Buy ExxonMobil Share", as well as recommendations in no way take your personal investment situation into account.

Christian Lukas draws your attention to the fact that he is in one recommended value itself can be invested.

Share this article
Comments