Microsoft stock is rallying after better-than-expected earnings. How far can it go from here?
Can Microsoft (MSFT) – Get Microsoft Corporation Report lead the Nasdaq out of the mess that it’s in?
There’s little doubt that we’re in a bear market, technically speaking, but Microsoft’s 7% post-earnings rally is giving the bulls reason for hope.
Alphabet (GOOGL) – Get Alphabet Inc. Class A Report (GOOG) – Get Alphabet Inc. Class C Report is mostly flat after its result and the rest of FAANG is due out this week. As many stocks continue to fall, investors are looking for glimmers of positivity.
They found it this morning with Microsoft’s top- and bottom-line earnings beat.
The stock posted a tepid after-hours rally, but on Wednesday investors are gobbling up Microsoft shares. That’s likely due in part to the software giant’s stability and in part to its robust cloud guidance.
As Real Money’s Stephen Guilfoyle put it, the company “excels at every level.”
With that in mind, let’s look at the chart of Microsoft stock, as it tries to lead the market out of the depths. Already, one area in particular stands out.
Trading Microsoft Stock
Daily chart of Microsoft stock.
Chart courtesy of TrendSpider.com
The stock rallied hard in March but came under pressure with the rest of the market in April. It traded right back down into the $270 to $275 support area.
Thankfully for the bulls, it continues to hold.
This morning’s gap-up has put Microsoft back over the 10-day moving average. But let’s keep things in perspective here. The stock is still below a number of key moving averages, and it’s not even back over last week’s high.
From here, I really don’t want to see the stock lose its post-earnings low just below $280. Not only does that put it back below the 10-day moving average, but it makes the stock quite likely to retest its low.
On the upside, the $293 area looms large. There, the stock finds multiple key measures, including the 50% retracement, the daily VWAP measure, and the 10-week, 21-day and 50-day moving averages.
If Microsoft stock can clear this area, then $300 could be on tap, followed by the 200-day moving average.
While today’s action is good for the bulls, they can’t lose sight of the broader market. We still have some big earnings reports to get through, and if the Nasdaq continues lower, it may very well drag Microsoft stock down with it.
Just keep an eye on today’s low.
