) will break $30 when pigs fly."
You better look to the sky because on Monday, it happened.
First Congress and the White House agreed that air traffic
controllers should go back to work and now this? What's happening
to the world?
You might have heard of this company. It's the one that bases
most of its business on the dying PC industry and has a CEO that
once said that there's no possible way that the iPhone could ever
It's also the company that seems to excel at giving tech
bloggers plenty of material to write about every time it
introduces a new version of Windows. (Because everybody wants to
relearn how to use their computer every couple of years.)
So what's the deal? Why has a stock that has perfected the art
of disappointing investors for years gone on this recent rip
higher? There are some things that don't seem to change in the
investing world. Blame everything on high frequency traders is
one and Microsoft not breaking the $30 level is another.
But it has. In fact, on Monday it traded to a high of $32.63
as of mid-day trading. The five year, yes, five year high sits at
$32.60. If it closes above that level, that's a huge bullish
Since its April 15 low, the stock is up more than 13 percent.
The reason or reasons aren't entirely clear but as Microsoft has
remained range-bound for years, earnings have climbed making this
stock even more of a value proposition. There's also the coming
Xbox release which should bring consumer attention back to a
segment of the company that drives monster revenue.
Then there's the legions of value investors who have waited
for some glimmer of hope that the company will show signs of
becoming a growth stock again. Now that they have it, more money
might be pouring in.
We can't predict the future but the charts might be able to
tell us something about where the stock is going next.
For the past six months, the stock has quietly risen 19
percent. Going back to late 2009, it has staged meteoric upside
gains in a relatively short period of time only to drop just as
fast. In fact, the long term chart reveals seven previous times
that investors were pulled into a bull trap.
Using history as the guide, if Microsoft doesn't convincingly
break through $32.60 on large volume, traders can expect a
pullback. In the past, the pullbacks have been 10 to 25 percent-a
If this becomes a convincing breakout, the stock will find
itself in bullish territory that is literally uncharted. Volume
is good but don't forget that many an investor can tell tales of
great pain when putting too much trust in a large-scale Microsoft
At the time of this writing, Tim Parker had no position in
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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