Ahead of Microsoft's (MSFT) fiscal fourth-quarter results due out this Wednesday a sell-side analyst at Jefferies raised their price target to $240 form $200 and maintained their "Buy" rating. The shares have already reached $216 so I do not consider this much of a leap of faith. I do consider a bump up of a price target ahead of earnings a positive for traders.
We looked at the charts of Action Alerts PLUS holding MSFT on July 9 and wrote that, "Traders and investors could raise sell stops to a close below $199 now. The $271-$285 area is our next price objective and the round number of $300 would follow after that."
Let's check out the charts of MSFT again this morning to see if we need to adjust our strategy.
In the daily Japanese candlestick chart of MSFT, below, we can see a number of lower shadows last week suggesting that traders rejected the lower price. Prices are above the rising 50-day and 200-day moving average lines. The trend is up but we know these are lagging indicators.
The On-Balance-Volume (OBV) shows a minor pullback, which at this point in time tells me that some traders may be reducing their long exposure ahead of earnings. The Moving Average Convergence Divergence (MACD) oscillator has crossed to a take profits sell signal but is still well above the zero line.