TAKEAWAYS
- MSFT stock price surges past its 52-week high but. pulls back, closing just shy of $379
- Investors should watch for dips and resistance-turned-support levels for long entries
- Microsoft's massive investment in OpenAI could help push the stock price higher
While Microsoft's (MSFT) Azure contends for the top spot in the cloud computing arena, trailing behind Amazon (AMZN), its $1 billion investment in OpenAI, and the hand it played in resolving the company's recent debacle, shows how prominently Microsoft is riding the AI tiger.
Investors, too, must be getting the message, as the market has pushed MSFT's stock beyond its 52-week high threshold.
How To Scan for Stocks Making New 52-Week Highs
- In SharpCharts, from Your Dashboard, scroll the Member Tools on the left and click on Sample Scan Library.
- The New 52-Week Highs scan is the second from the top on the left side.
The stock went above $379.00 in Wednesday's trading session, and, with no historical resistance ahead, anyone looking to go long might wonder where a good entry price to open a position might be, despite a slight pullback.
At the end of 2022 and the beginning of 2023, MSFT bounced off its 200-week simple moving average. At least that gave bulls a reference point, with both serving as ideal entry points (see weekly chart of MSFT below).
CHART 1: WEEKLY CHART OF MICROSOFT STOCK. The stock is in all-time high territory. Where to from here?Chart source: StockCharts.com. For educational purposes.
But having broken above its all-time high threshold, it's hard to tell whether MSFT stock is skyrocketing or whether its sky-high valuations are subject to the forces of market gravity.
Also, fundamentally-based projections aren't much help here—they range anywhere from $390 to $450 a share. So, if you're looking to go long, it helps to assess whether the stock is currently overbought and if a dip might be forthcoming. For that, we'd have to look at the daily chart of MSFT stock (see below).
If you look at the relative strength index (RSI), now falling from 70, you can spot a slight divergence between the price rise and the RSI declining from "overbought" territory. MSFT may be pulling back now, but it's too early to tell if the pullback will continue in the coming sessions.
If it does continue to slide, we're looking at former resistance-turned-support levels as possible prices to anticipate a bullish bounce. This is punctuated by a thickening bullish Ichimoku Cloud, which, if you can remember, provides a range of potential support.
Why the cloud? The wider range complements the specific price support levels of $365 and $350. A pullback to this range, starting at the top-most $365 level and followed by a bounce, might provide you with an optimal entry point to get long MSFT, should you want to add it to your portfolio.
Note January 31, 2024 on your calendar. That's when MSFT drops its next earnings report. Right now, the buying craze is also centered on its ties with OpenAI. So keep an eye on any developments or news as we count down to January of the new year.
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.
