4 Trade Ideas for Microsoft: Bonus Idea

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

Microsoft, $MSFT, started to reverse high off of a March low. By June it had made a new all-time high, but it was not done yet. It continued to a top in July, running against rising trend support, and then settled into consolidation. It broke that to the upside in August and held for a week but then fell back to support, and under prior resistance. The bullish case will focus on the hold at support with a Hammer reversal candle. The bearish case will focus in the failed break out.

The rest of the evidence shows the RSI falling in the bullish zone, but starting to level at prior support. The MACD is about to cross down and positive. Price held over the rising 50 day SMA and finished just under the 20 day SMA. There is support at 211 and 207.75 then 203 and 200 before 195. Resistance higher comes at 217 and 225 then 232. The stock pays a dividend with an annual yield of 0.95% and started trading ex-dividend on August 19th. The company is expected to report earnings next on October 21st.

The September options chain shows large open interest spread from 175 to 220 but then biggest at 230 on the put side. The call side shows it focused and bigger from 220 to 230. The October chain builds to a peak at the 210 put, while the call side is also biggest there, and then tails to 250. The October 23 Expiry chain, the first covering the earnings report, has very light open interest. The November chain has been open much longer and shows small amounts of open interest spread from 175 to 220 on the put side. The call side sees massive amounts at the 220 and 240 strikes.

Microsoft, Ticker: $MSFT

Trade Idea 1: Buy the stock on a move over 217 with a stop at 210.

Trade Idea 2: Buy the stock on a move over 217 and add an October 210/200 Put Spread ($4.65) while selling an October 240 Call ($4.65) to fund the protection.

Trade Idea 3: Buy the November 220/October 235 Call Diagonal ($10.70) while selling the October 195 Put ($6.00) to partially fund it.

Trade Idea 4: Buy the November 190/220/240 Call Spread Risk Reversal for a $1.20 credit.

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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 wrapping up August and heading into the unofficial end of summer, saw the equity markets finally ran out of gas and pull back.

Elsewhere look for Gold to continue in consolidation while Crude Oil possibly moves to a downtrend. The US Dollar Index is moving to the upside possibly out of consolidation while US Treasuries consolidate. The Shanghai Composite looks to consolidate as well while Emerging Markets pause in their uptrend.

The Volatility Index looks to push up towards the June highs making the road rough for equity markets. Their charts are showing possible reversals or at least indecision on the longer timeframe. On the shorter timeframe the IWM, the QQQ and SPY ended the week with possible reversal candles though adding confusion to the story. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

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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