Trading Strategies For Microsoft Stock Before And After Q4 Earnings

Microsoft Corporation MSFT is set to print its fourth-quarter 2023 financial results after the market closes on Tuesday. The stock was rising almost 2% heading into the event.

When the tech giant printed its fiscal third-quarter results on April 25, the stock surged in after-hours trading and closed up 6.28% the following day.

For that quarter, Microsoft reported an EPS of $2.45 on revenue of $52.9 billion. Both numbers beat the consensus analyst estimates of $2.23 and $51.02 billion, respectively.

For the fourth quarter, analysts estimate Microsoft will print earnings per share of $2.55 on revenues of $55.47 billion.

Ahead of the print, Goldman Sachs analyst Kash Rangan reiterated a Buy rating and raised the price target from $350 to $400... Read More...

From a technical analysis perspective, Microsoft’s stock looks neutral heading into the event, trading in a rising channel pattern but settling into a possible bear flag. It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

Options traders, particularly those who are holding close-dated calls or puts, take on extra risk because the institutions writing the options increase premiums to account for implied volatility.

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The Microsoft Chart: Microsoft formed a hammer candlestick on Monday, indicating a bounce was likely to take place on Tuesday. On Tuesday, the stock was rising, confirming the prior day’s candlestick and looking to print a bullish Marubozu candlestick on the daily chart.

• The stock has been trading in a rising channel pattern since March 13, making a series of higher highs and higher lows. Microsoft’s most recent higher low was formed on Friday at $339.93 and the most recent higher high was printed at the $366.78 mark on July 18.
• Bullish traders want to see Microsoft receive a bullish reaction to its earnings print, which would negate the bear flag. If that happens, the stock may find resistance at the upper ascending trend line of the channel.
• Bearish traders want to see big bearish volume come in and break Microsoft down from the bear flag and then for continued momentum to drop the stock down through the lower ascending trend line of the channel, which could accelerate downside pressure.
• Microsoft has resistance above at $366.78 and at the psychologically important $370 mark and support below at $349.67 and at $338.72.

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