Skip to main content

Friday was uneventful for most of the day, with the exception of a late-day surge by a number of stocks, Microsoft (MSFT) - Get Microsoft Corporation Report included.

However, on Monday many of those stocks began the day lower. Perhaps it was due to concern over Hong Kong. Maybe it was because we had such a rich close on Friday. Likely, it was a combination of both.

But after Microsoft pulled back in early trading, shares were near break-even in midday trading Monday. In other words, buyers stepped right up on morning weakness and bid MSFT stock right back up.

That price action wouldn't be all that important on most trading days. So Microsoft has demand, so what?

I found the action interesting because on Friday Microsoft stock hit new all-time highs and began putting together a big-time breakout. If the stock can gain on its recent momentum, it could put $150+ on the table.

Let's take a closer look at the charts.

Microsoft is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells MSFT? Learn more now.

Scroll to Continue

TheStreet Recommends

Trading Microsoft Stock

Image placeholder title

Near the end of October, Microsoft stock gapped higher after it was awarded the long-term, multi-billion JEDI cloud contract from the Pentagon. That gap-up action sent shares over $142, a multi-month resistance zone that had stymied each rally.

After the gap-up move, MSFT stock has spent its time consolidating in a sideways fashion. It was encouraging to see each dip get bought sooner and sooner, as highlighted by uptrend support (blue line).

This was perfect for bulls, as it gave the stock time to digest the gains and prevent it from becoming overbought. Further, each day that went by and Microsoft stock didn't fall back to $142 showed that buyers were at the ready and weren't willing to let it go lower.

As long as Microsoft holds up over $145, the breakout from Friday can continue to take hold.

A move over $146, the highs from Friday, could propel shares even higher as investors will likely look to run this name to $150. From there, it's anyone's guess as to whether the will recoil and rest or power through. But for now, that's the setup.

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