When Microsoft (MSFT) reports its quarterly results on Tuesday after the close, it will be the largest company to report earnings so far this quarter. That holds until Apple (AAPL) reports later this week.
Still, as the second-largest U.S. company, Microsoft carries quite a bit of weight on Wall Street.
The software giant dominates on multiple levels of enterprise and consumer spending.
It generates better operating margins than all of FAANG, is forecast to generate double-digit earnings and revenue growth for the next several years, and the stock price has now suffered its largest decline since the Great Recession.
In my view, all that adds up to an opportunity on the long side. But when? Let’s look.
Trading Microsoft Stock
A little more than a month ago, Microsoft stock was teetering on the $240 level and after citing the same notes as above, I said the stock was a better buy between $215 to $225.
After trading to a low of roughly $219, Microsoft shares have rallied hard out of that support zone. (At last check they were around $244.)
With the earnings on tap, though, traders wonder whether the stock can continue to power higher or if it will revisit this area.
With the stock now sitting against the underside of the 10-week moving average, the recent trend would point to a move lower. But earnings can be a binary event and snap that prospect.
If that’s the case, the bulls need to see Microsoft stock clear the $250 area. If it can do so, it puts the 21-week moving average in play, then the $267 to $270 zone.
On the downside, a bearish reaction to the earnings could put the $225 breakout level back in play, along with the $219 low.
Below the 2022 low, and the 61.8% retracement (as measured from the all-time high down to the covid low) and the 200-week moving average come into play around $215.
I like this area as a possible buying opportunity.
For what it’s worth, if Microsoft stock tests $210, it will be down roughly 40% from the all-time high.
At the very least for long-term investors, I believe $210 to $220 would warrant some accumulation, even though we are in the midst of a bear market.
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