Microsoft is tearing up the charts
Microsoft Corp (NASDAQ:MSFT) stock is already outperforming the broader market, boasting a 49% year-to-date lead versus a 13.9% gain by the SPDR S&P 500 ETF Trust (SPY) in the same time period. The equity is on a six-day winning streak, with 10 gains out of the last 11 sessions, as it looks to reclaim its July 18 all-time high of $366.78. What's more, a historically bullish signal is flashing for MSFT that may indicate the rally still has plenty of steam.
According to Schaeffer's Quantitative Analyst Rocky White, today's peak comes amid historically low implied volatility (IV), which has been a bullish combination for the stock in the past. White's data points to eight other signals over the last five years when the equity was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) was in the 20th percentile of its annual range or lower.
This is now the case with
Microsoft stock's SVI of 19%, which is in the 4th percentile of its annual range. One month after these signals, the shares were higher 75% of the time, averaging a 3.4% gain. From its current perch of $356.58, a similar move would put Microsoft stock
at a new record high of roughly $368 per share.
A sentiment shift in the options pits could also generate tailwinds. This is per MSFT's Schaeffer's put/call open interest ratio (SOIR) of 0.92 that stands in the 82nd percentile of annual readings, indicating a put-bias amongst these traders.