4 Trade Ideas for Microsoft: Bonus Idea

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

Microsoft, $MSFT, comes into the week at minor resistance after a breakout. The Bollinger Bands® are pointing higher as price pushes up. The RSI is strong in the bullish zone with the MACD positive and moving higher. There is no resistance above 443.40 but there is a target from a 2022 Cup and Handle to about 468 above. Support lower comes at 433 and 426.50 then 420 and 412. Short interest is low under 1%. The stock pays a dividend with an annual yield of 0.68% and will start trading ex-dividend August 15th.

The company is expected to report earnings next on July 23rd. The June options chain shows the biggest open interest at the 430 strike on the put side this week and the 440 strike on the call side. The July options have open interest spread from 430 to below 400 on the put side and shows big spikes at 420 and 460 on the call side. Finally, the August chain has open interest spread from 430 to under 400 on the put side, biggest at 425 and 410. On the call side it builds from 400 to a peak at 480.

Microsoft, Ticker: $MSFT

Trade Idea 1: Buy the stock on a move over 444 with a stop at 426.50.

Trade Idea 2: Buy the stock on a move over 444 and add a July 440/420 Put Spread ($5.35) while selling the August 480 Call ($4.55).

Trade Idea 3: Buy the July/August 460 Call Calendar ($6.45) while selling the July 425 Put ($3.00).

Trade Idea 4: Buy the August 420/450/470 Call Spread Risk Reversal ($1.15).

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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 the June FOMC meeting and inflation data in the books, saw equity markets exhibit both strength and weakness with large caps and tech names continuing to make new all-time highs while small caps took a beating.

Elsewhere look for Gold to continue consolidation while Crude Oil consolidates in a broad range. The US Dollar Index looks ready to test the top of the consolidation range while US Treasuries bask in a short term uptrend in the secular downtrend. The Shanghai Composite looks to continue the short term move lower while Emerging Markets consolidate in the long channel.

The Volatility Index looks to remain very low and stable making the path easier for equity markets to the upside. The charts of the SPY and QQQ look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY have negated prior possible momentum divergences. The IWM continues to languish and showed possible renewed weakness moving lower on the week. 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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