Microsoft (MSFT) – Get Report will be the first of the stocks with a $1 trillion market cap to report earnings, when its quarterly numbers are released after the close of trading Tuesday.
Apple (AAPL) – Get Report and Amazon.com (AMZN) – Get Report are the other two $1 trillion companies and will both report on Thursday after the close.
In any regard, Microsoft has been stuck in a sideways trading pattern. That has been the case since it hit a high of $215.86 in early July.
While the stock did pop higher in late August along with the rest of the market, it went right back down with the Nasdaq in September. Now investors will be looking for Microsoft to break the downtrend and push out of its trading range.
In fact, it’s exactly what we had in 2019. Shares were range-bound from late July until October, when earnings spurred the stock out of its funk. Can we get a repeat performance?
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The $215 level has been notable over the past few months, but it hasn’t been the end-all, be-all level for Microsoft. The stock has been able to push through this level twice now, although shares are currently back below it.
One could also argue Microsoft sports a bit of a cup-and-handle formation, albeit, a bit of a sloppy one. That’s where shares carve out a U-shaped pattern, followed by a slight pullback. That’s illustrated on the chart above via purple lines.
With Monday’s action, Microsoft stock is breaking below the 50-day moving average and trading down into the 100-day moving average. It doesn’t matter much now, though. What we want to see is how it trades after earnings.
On the upside, bulls need to see Microsoft clear the $215 mark and preferably, downtrend resistance (blue line). More ideal than that would be a move over the October high at $225.21, which is within pennies of the 161.8% extension at $225.19.
Above puts the all-time high in play up at $232.86, followed by a possible run up toward the two-times range extension near $247.
On the downside, a break of the 100-day moving average could put the $200 level and range support near $195 in play. Below that and the June breakout level near $187.50 is possible downside target, along with the 200-day moving average.