Microsoft devices have seen an uptick in use amid "stay at home" orders
Blue chip and household technology name Microsoft Corporation (NASDAQ:MSFT) has succumbed to nearly every hill of the stock market roller-coaster that has become 2020. In late February, the company warned investors that it expected its Windows units to miss their third-quarter guidance due to the coronavirus outbreak. The resulting stock drop-off forced MSFT to breach its 50-day moving average for the first time since October 2019. However, since bottoming out near $132 late last month, the equity has seen a recovery in its year-to-date performance. Below, I will take a deep dive into recent stock market action we’ve seen from the software as a service (SAAS) leader, and speculate on what the current volatile Wall Street climate could mean for the security – from both sides of the spectrum.
With much of the world stuck at home following widespread "stay at home" orders, it comes with little surprise Microsoft has seen an uptick in use from both its Xbox video game device and Microsoft Teams, a workplace communications platform. Over the past 12 months, the stock has climbed 30%, and is now seeing support from both the 200-day and 320-day moving averages.
However, it would be naive to assume a few trendlines of support and a fresh lift off a recent bottom was means for a successful long-term run higher. To be safe, we must look at all sides and possibilities of Microsoft stock’s future, including the short-term, which could be unstable at best. For instance, the aforementioned 50-day moving average has now shifted into a stiff ceiling for the shares, capping a March 31 breakout attempt by the equity. MSFT has also been inching below its year-to-date breakeven mark, a sure signal of uncertainty in how the tech giant will perform in the coming weeks.
Regardless, its important to note the expansive 49% increase in short interest on the equity in the most recent reporting period. Although this accounts for less than 1% of the stock’s total available float, it does indicate that bears are starting to gain more control over MSFT. Either way, Microsoft stock is almost guaranteed to make notable moves in the coming weeks, as the volatile stock market climate continues to unfold.
Subscribers to Bernie Schaeffer's Chart of the Week received this commentary on Sunday, April 5.