You Ask, We Analyze: Why Microsoft Needs A Quick Rest Before Another Run Higher

This week, Benzinga asked its followers on Twitter what they were trading, and selected one ticker from the replies for technical analysis.

@BenRabizadeh is trading Microsoft Corporation MSFT, which was spiking up about 1.5% higher on Wednesday and defying the general market, which saw the S&P 500 negative by about 0.3%. Seven analysts weighed in on the stock, six of whom raised their price target:

• DA Davidson analyst Gil Luria maintained a Buy rating on Microsoft and raised the price target from $280.00 to $325.00
• JP Morgan analyst Mark Murphy maintained an Overweight rating and raised the price target from $265 to $305
• Mizuho analyst Gregg Moskowitz maintained a Buy rating and raised the price target from $280.00 to $300.00
• Jefferies analyst Brent Thill maintained a Buy rating and raised the price target from $275.00 to $310.00
• Oppenheimer analyst Timothy Horan maintained an Outperform rating and raised the price target from $265.00 to $280.00
• Piper Sandler analyst Brent Bracelin maintained an Overweight rating and raises the price target from $247.00 to $290.00.
• Wedbush analyst Daniel Ives, the only firm to not increase Microsoft’s target price, reiterated an Outperform rating and maintained its $280.00 price target.

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From a technical analysis standpoint, Microsoft looks set to pull back temporarily before continuing to trend higher because on Tuesday, the stock broke up from a bull flag pattern but entered overbought territory on Wednesday.

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The Microsoft Chart: Microsoft formed a bull flag pattern between Jan. 25 and Monday, with the pole formed over the first seven trading days of that time frame and the flag created over the two trading days that followed. The measured move of the break of the flag is about 15%, which suggests Microsoft could surge up toward $293.

• The downward-sloping flag formation took place just above the 200-day simple moving average (SMA), which occurred due to consolidation. When Microsoft held the 200-day SMA as support, it gave bullish traders confidence.
• On Wednesday, Microsoft gapped up to open the trading day and then popped higher before running into a group of sellers. If the stock closes the trading day with a significant upper sick, the stock will print a doji or shooting star candlestick, which could indicate lower prices will come on Thursday.
• If Microsoft closes the trading day near its high-of-day prices, the stock will print a bullish kicker candlestick, which could indicate higher prices are on the horizon.
• Bullish traders would like to see a minor pullback to drop the stock’s relative strength index (RSI) down to a more comfortable level. Microsoft’s RSI is currently measuring in at about 69%. If that happens, Microsoft may fill the lower gap and bounce up from Tuesday’s high of day.
• Microsoft has resistance above at $276.90 and $283.11 and support below at $271.36 and $263.19.

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