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Comparing Microsoft, Sony Chart Patterns

NEW YORK ( TheStreet) -- The battle between Xbox and PlayStation has intensified in the race for holiday sales. I am not a user of either product, but when you look at my buy-and-trade strategies, the companies that make those products have some similarities and differences.

Microsoft (MSFT) ($37.40) has a hold rating according to www.ValueEngine.com and the stock is 33% overvalued in a stock market where 85.9% of all stocks are overvalued.

Microsoft is also one of 57.2% of the stocks overvalued by 20% or more. The ValuEngine one-year price target is $37.94. My annual value levels are $28.57 and $27.92 with semiannual pivots at $33.95 and $35.89, a quarterly pivot at $36.22 and a monthly risky level at $38.97.

The daily chart for Microsoft is neutral with declining momentum but with the stock above its 21-day simple moving average at $36.69.

The long-term weekly chart for Microsoft shows that the stock is at a multiyear high and is entering the 'dunce cap' of its tech bubble of 1999-2000. The weekly chart profile is positive but overbought and stays that way with weekly closes above its five-week modified moving average at $35.96. The major support over the past two years has been the 200-week SMA at $28.60, which lines up with my annual value levels.

Courtesy of MetaStock Xenith

Sony (SNE) ($18.65) has a buy rating according to ValueEngine. The ValuEngine one-year price target is $19.66. My quarterly value level is $16.02 with semiannual and annual pivots at $19.39 and $19.92 with monthly and semiannual value levels at $23.68 and $24.42.

The daily chart for Sony is positive with rising momentum with the stock above its 21-day SMA at $18.04. The stock has upside to at least its 50-day and 200-day SMAs at $19.55 and $19.05.

The long-term weekly chart for Sony shows that the stock is well below its 'dunce cap' of its tech bubble of 1999-2000. The weekly chart profile is negative but oversold, but it shifts to positive with a weekly close above the five-week MMA at $18.84 which should result in a trend up to the 200-week SMA at $22.76. Note that the 200-week has been a resistance since 2010.

Courtesy of MetaStock Xenith

My conclusion is that Sony has the most upside potential given the success of the PlayStation and that success of the Xbox has been factored into the recent strength in Microsoft.

Microsoft has a hold rating and has an overbought weekly chart, and is above its 200-week SMA. Sony has a buy rating and has an oversold weekly chart and is below its 200-week SMA.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Richard Suttmeier is the chief market strategist at AlphaPlus Analytics in addition to ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

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