Microsoft Corp. (MSFT) is the Stock of the Day at Real Money Thursday after its board approved a $40 billion stock buyback plan and increased the quarterly dividend by 11%. The stock, which is a holding of Jim Cramer's Action Alerts PLUS charitable trust, is up a bit on the news. Let's check out the charts.
In this daily bar chart of MSFT, below, we can see two trends. First is the uptrend from late December to late July. The second trend starts in June as prices turn sideways and form a possible triangle formation. MSFT has crossed back and forth around the flattening 50-day moving average line since early August. The 200-day simple moving average line has a positive slope and was last tested back in late January and early February. MSFT does not look extended versus the 200-day line.
The On-Balance-Volume (OBV) line has moved up with the price action and turned flat in late July, telling us that buyers and sellers of MSFT were in balance. The Moving Average Convergence Divergence (MACD) oscillator has been hugging the zero line recently, which is another display of the balanced price action.
In this weekly bar chart of MSFT, below, we can see that a long position in MSFT the past three years has been rewarding. Prices have stayed above the rising 40-week moving average line except for a few months in late 2018. The weekly OBV line is bullish, but I would like to see it make a new high soon. The MACD oscillator crossed to the downside in July for a take profits sell signal.
In this Point and Figure chart of MSFT, below, we can see an upside price target of $153. A trade at $142.18 will be the breakout point. A decline to $130 would be bearish.
Bottom line strategy: Investors and traders should operate from the long side above $140. The $155 area is the first price target. Risk a close below $131.