How Microsoft Stock Can Break Out to New Highs on Earnings - TheStreet

Microsoft (MSFT) - Get Report stock climbed 1.97% to $139.94 on Thursday, after the company delivered its third-quarter results.

The shares are tiptoeing higher, as Microsoft stock continues to flex its size. The tepid but bullish action leaves the stock on the cusp of a potential breakout -- one that could launch the megacap tech stock to new all-time highs.

Microsoft already commands a market cap of $1.06 trillion, yet new highs don't seem out of the question. Microsoft remains locked in a market-cap battle with the market's other largest company: Apple (AAPL) - Get Report .

While some investors are worried about a slowdown in the cloud, it's hard to really hammer MSFT after its most recent quarter. Earnings of $1.38 a share beat estimates by 14 cents, while revenue of $33.1 billion grew nearly 14% year-over-year and crushed expectations by $860 million.

Given the quarter and the potential for new highs, it comes as little surprise that Microsoft is Real Money'sStock of the Day.

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Trading Microsoft Stock

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Although Microsoft stock has been stalling near the $141 area, the charts still tilt bullish. That's as the stock continues to put in a series of higher lows (purple arrows) and finds support from its 100-day moving average.

MSFT stock flirted with a breakdown of the 100-day moving average on Wednesday, just ahead of its earnings report. Instead, though, bulls were able to reclaim the mark before the close and rally the stock higher on Thursday.

As they did so, Microsoft stock also reclaimed the 50-day moving average Thursday.

Now, the shares sit just under resistance. A further move higher could trigger a breakout, with a close over $141 setting up the potential move. Above that mark and the October high at $141.79 is on the table, with the September high of $142.37 not far above that.

Over the September highs and MSFT stock is in breakout mode.

On the downside, bulls shouldn't worry too much unless the shares lose the 100-day moving average. If it loses the recent low near $135.61, then the month low at $133.22 is on the table. Below that and the 78.6% retracement near $131 is possible.

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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.