Today we saw in MSFT some nice consolidation and confirmation of the turnaround after falling relentlessly during 4 days.
I feel good the more the stock resists the unending stream of negative news coming from the Apple fan boys of Business Insider or Yahoo Finance, who are apparently hurt because their partnership with MSFT didnt work or because MSFT tried to buy them out or because they bought at a 40 PE. I dont know but they are pissed.
I feel good because I believe in the company, I believe in its leader and source of inspiration (not Ballmer), and that belief is now turned out to be justified by facts. MSFT has invested heavily in innovation and its ROI above 20% (if we don’t take into account the non cash charge of the write-off in July Quarter), shows their investments usually pay off really good.
To see where MSFT is apparently investing now, besides the Cloud (another future source of revenue) and W8 and Phones. See here.
I also feel good because people with no knowledge on investing at all like Macke and Jackson (haters from Yahoo Finance), are now silent and since people I do respect, among other things because they predicted AAPL’s turnaround, are now writing. See here.
Finally on the technical side, I feel good because a rally is apparently soon to come as shown by this positive divergence forming:
In the chart above you can see clearly how the negative divergence anticipated the end of the rally for MSFT, and now I expect that the positive divergence anticipate the next rally.
Finally, there is another positive chart showing MSFT trading at the bottom of its range:
The chart above shows 30.5 as the roof of the channel. That’s my target for January.