4 Trade Ideas for Microsoft: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

Microsoft, $MSFT, topped through December and then started to move lower. It continued down to a low under the 200 day SMA last week. That was the first time below the 200 day SMA since the pandemic started. It started higher late in the week and closed with a bullish candle ending just under resistance.

The RSI is rising near the midline with the MACD crossing up. There is resistance at 311 and 320 then 330 and 339 before 344.75. Support lower comes at 305 and 300 before 292 then 288. The stock pays a dividend with an annual yield of 0.80% and will start trading ex-dividend on February 16th. The company is expected to report earnings next on April 25th.

The February options chain shows open interest spread from 350 to 250, biggest at 300 on the put side. On the call side it builds from 300 to a peak at 340 and 350. March options are also spread wide, from 340 to 275 on the put side and 300 to 350 on the call side. In April it is biggest from 320 to 280 on the put isde and from 300 to 350 on the call side.

Microsoft, Ticker: $MSFT

Trade Idea 1: Buy the stock on a move over 311 with a stop at 301.

Trade Idea 2: Buy the stock on a move over 311 and add a February 307.50/287.50 Put Spread ($6.00) while selling the April 335 Calls ($5.65).

Trade Idea 3: Buy the February/April 330 Call Calendar ($6.20) and sell the February 287.50 Put ($3.20).

Trade Idea 4: Buy the April 280/310/340 Call Spread Risk Reversal ($4.50).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with just one trading day left in January traders are getting excited to turn the page on an ugly month for equities.

Elsewhere look for Gold to continue in consolidation while Crude Oil continues to move higher. The US Dollar Index continues in an uptrend as well while US Treasuries consolidate. The Shanghai Composite is moving lower in consolidation while Emerging Markets remain in a downtrend.

The Volatility Index is elevated but moving lower easing the pressure on equity markets. Their charts are mixed with the SPY and QQQ showing consolidation in the pullback in the short timeframe and potential reversal candles on the longer timeframe. The IWM is in a downtrend on the shorter frame with indecision on the longer timeframe. Use this information as you prepare for the coming week and trad’em well.

 

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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