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Technical Analysis Of MSFT : Is This The Time To Buy Microsoft?

MSFT has been in a nice uptrend but recently it had a correction down to its 50 day moving average. Since the stock is still in an uptrend, is this stock ripe for a buy the dips?

In order to answer this question we need to determine whether Microsoft's uptrend is still intact. When a stock is in a long term uptrend, it makes sense to buy the stock when it corrects.

We also need to ascertain what are the important price support areas that Microsoft should not drop to. If and when MSFT drops below that important support area, we can consider our outlook for the stock wrong and should not buy the stock anymore.

The trend is your friend as they say. Until the trend ends, buying the dips is usually a very profitable investment strategy.

technical analysis of MSFT

We will look at the daily chart of MSFT first. 

As you can see, the stock is correcting to the 50 MA as well as a support area. The support area of 80 to 86 is a strong support area and this will be crucial for MSFT's longer term health. If MSFT is able to stay above this support area, then it will be able to continue grinding higher.

Notice how Microsoft's share price has been trending higher? It has stayed above the rising 50 MA most of the time. I think investors will be watching very carefully whether MSFT is able to find support at the 50 MA.

At the time of this writing, the Dow, Nasdaq and S&P had suffered a very big correction. Interestingly, MSFT seems not to have that super sharp sell off compared to the main indices.

Perhaps this suggest strength. Selling volume is heavier than normal but it is still less than those days where there is heavy green volume coming in. This also tells us that the selling is not as big as we feared.

If one really wants to buy the dips in MSFT, it is perhaps wise to gain some help from the 60 min chart of MSFT.

A sharp drop should not be taken lightly. Which is why it is advisable to only start thinking of buying MSFT after the stock goes back above the 60 min 20 MA. This is to keep buyers safe from the volatility in the stock.

Let us now switch to the weekly chart of MSFT.

When we look at the big picture, the recent correction is just a small blip in the grand scheme of things for MSFT. Looking at the weekly chart, we can see that the stock is above its rising weekly 20 MA and 50 MA for a very long time. It has not gone below the 20 MA for a long period.

Which is why if MSFT is able to stay above the support area and stay above the 20 MA, it might be a good opportunity for investors to buy the stock.

In this kind of nice uptrend, it is best to just follow a simple trend following method. I like to use the rising 20 MA and 50 MA. As long as MSFT stays above the rising weekly 20 MA, we should be bullish in the stock. One should be cautious when it drops below the 20 MA and be extra cautious when it drops below the 50 MA.

So far there is nothing to worry yet for the long term.

I would like to show you the quarterly chart of MSFT. Wow! This stock is really a home run stock. As you can see, the stock has been trending up in the very long term chart. This home run stock is responsible for making Bill Gates one of the richest man in the world!

There is a very strong long term support area in the 50-55 price range. This might not be useful to the short term investor, but for those who are in MSFT for the long run, this support area helps to keep things in perspective.

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