Microsoft's Technical Picture Not Impressive

Strategic Insights -

Microsoft's (MSFT) technical picture has been somewhat concerning in recent years, with the stock struggling to break through resistance levels, including the 30 level since 2002. The company's 10-month and 20-month moving averages have failed to provide significant support, leaving investors with limited options. Despite a massive 500,000 open calls in the July and October options series, the stock's underperformance against the Dow Jones Industrial Average (DJIA) since January 2001 remains a significant concern.

Key Takeaways:

  • Since 2002, MSFT's shares have continually tested the resistance of the 30 level, with no significant breakthrough.
  • The 10-month and 20-month moving averages have failed to provide support for MSFT, leaving the stock vulnerable to further decline.
  • MSFT has underperformed the DJIA on a monthly basis since January 2001.
  • Call open interest for MSFT is massive in the front three months of options, but technical underperformance remains a concern.
  • Less than one percent of MSFT's available float is sold short, but this leaves little room for significant short-covering support.
  • The Street continues to turn a blind eye to MSFT's underperformance, but Schaeffer's Equity Scorecard indicates a path lower awaits.

Statistics:

  • 53% of analysts tracked by Zacks rate MSFT with a "buy" or better.
  • MSFT has underperformed the DJIA on a monthly basis since January 2001.
  • The stock's short-interest ratio is 0.92.
  • Schaeffer's put/call open interest ratio (SOIR) is 0.25.
  • The SOIR percent rank is 2%.
  • MSFT earns a 1.0 out of a possible 10 on Schaeffer's Equity Scorecard.

Sources:

  • Zacks Investment Research
  • Schaeffer's Investment Research, Bernie Schaeffer
  • Forbes
  • Barron's