Microsoft Is a Buy-the-Dips Stock This Fall: Chart

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The technology sector is having a rough October.

Since peaking earlier this month, the popular SPDR Technology Select Sector ETF (XLK) has shed 6.4% of its market value, cutting almost half of the sector’s year-to-date gains. And things look worse in some of the individual tech names that have led the market higher in 2017 and 2018.

Facebook (FB) is down 24% in the last three months.

Netflix (NFLX) is down 20% over that same stretch.

But despite the recent about-face for tech stocks, some in the sector are actually looking buyable here. One of the biggest standouts this fall is a tech giant that’s been rallying under the radar as most investors fawned over the ‘FAANG’ stocks – I’m talking about Microsoft Corp. (MSFT) .

Want to Buy $1 Worth of Stock for 90 Cents or Less? You can with certain so-called “closed-end” mutual funds – an often overlooked investment class. Register for a free online video in which TheStreet’s retirement expert Robert Powell and an all-star panel tell you all you need to know. 

Microsoft has already had a blockbuster year in 2018, charging almost 30% higher on a total-returns basis year-to-date. And, in the final stretch of the year, there could be more upside where that came from. To figure out how to trade it, we’re turning to the chart for a technical look.

You don’t need to be an expert trader to figure out what’s happening in shares of Microsoft right now. In fact, the price action in this tech giant is about as simple as it gets. All year long, Microsoft has been trending higher in a very well-defined uptrending channel, catching a bid on every test of trendline support along the way.

Simply put, Microsoft is a “buy the dips” stock this fall. And shares are coming off a dip this week.

Investors looking for a buying opportunity in tech should buy Microsoft’s next bounce off of support.

If you decide to buy the next bounce in Microsoft, risk management is key, especially with the market at its current high levels. The 200-day moving average has been acting like a solid (if conservative) proxy for support since the end of June; that makes it a logical place to park a protective stop below. If MSFT violates the 200-day, then its primary uptrend is over and you don’t want to own it anymore.

Meanwhile, shares continue to point up and to the right.

Want to Buy $1 Worth of Stock for 90 Cents or Less? You can with certain so-called “closed-end” mutual funds – an often overlooked investment class. Register for a free online video in which TheStreet’s retirement expert Robert Powell and an all-star panel tell you all you need to know. 

2018-10-10 09:48:00

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