Microsoft's Uptrend Still Has a Lot of Gas

 | Mar 16, 2017 | 9:27 AM EDT
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Microsoft (MSFT) keeps climbing and climbing, leaving disbelievers in the dust since July as it has continued its run from 2013. MSFT broke out of a major long-term base pattern in 2013 and looks like it is going to be a "three to four bagger" from the base around $30. You read that right, now lets's look at the charts and indicators.

In this one-year daily bar chart of MSFT, below, we can see the rally from the May/June lows. There is an early bullish golden cross of the 50-day and 200-day moving averages in August. July has a breakaway gap and in October there is a runaway, or measuring, gap. MSFT has rallied and the moving averages have maintained their positive slopes. The 50-day line has been tested successfully several times since November.

The daily On-Balance-Volume (OBV) line has drifted lower since late October, suggesting that longs have taken profits on a scale up. As MSFT looks set to continue its gains, we would want to see the OBV line strengthen. The trend-following MACD oscillator has been above the zero line since July and looks poised for a fresh buy signal.

In this three-year weekly bar chart of MSFT, above, we can see that it has been in an uptrend for some time, with two large consolidation patterns. Prices are above the rising 40-week moving average line and the weekly OBV line has been positive the whole time, unlike the daily line. The weekly MACD oscillator has been above the zero line since October 2015 and could make new highs if prices breakout further to the upside.

In this first Point and Figure chart of MSFT, above, we can see a strong uptrend from 2009, with a potential upside target of $84.

In this second Point and Figure chart of MSFT, we can see the price action back to 1999. This shows the breakout from the base in 2000 to 2013. The potential price target from this base measures to around $99.

Bottom line: The 13-year base on MSFT (see the Point and Figure chart, above) gives us a reason to be very bullish on an old tech name. Traders and investors can add to longs above $66 and they should risk a close below $62. Around $84 and then the $99 area are our potential upside targets for MSFT.

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