Boston, MA 09/15/2014 (wallstreetpr) – Microsoft Corporation (NASDAQ:MSFT) (Closed:46.70, Down:0.64%) is buying the company Mojang for $2.5 billion and right now the price action suggests that maybe the market has already discounted the news. The stock is contained in the narrow range of $46-$47 for the last 4 sessions and even today it may remain in the same range but this is looking more like a shallow correction than anything bigger. Technically, only a break below $45.50 may induce any weakness in the short term, dragging the price to $44.50 or even $43 levels.
Like most other IT stocks, Microsoft Corporation (NASDAQ:MSFT) made its life high at $59.97 in 1999-2000 and crashed vertically to find the bottom at $20. But unlike most of its peers, it made a new low at $14.87 in 2009, which turned out to be a graveyard for the bears. The stock sharply bounced from the 2009 bottom to rise by more than 200% till now. In 2001 and 2007, twice the stock faced huge supply pressure from the $37.50-$38 levels but this year, it has convincing broken above that area, which may provide excellent support in any correction.
The long term chart shows clear acceleration of the bullish momentum. The breakout above a 14-year old range has a huge significance and the rally may not stop before reaching its target. The range gives us an initial target of $54, about 15% up from the current price.
The only conflicting signal comes from the weekly chart in the logarithmic scale, which shows the rally from $31 till now to be contained in a Rising Wedge pattern, implying limited upside. But the price doesn’t show any weakness yet and only a break below $43 would make this pattern relevant.
With the bullish momentum increasing with every passing week, the investors may use any correction to $43.00-50 to buy the stock with limited risk and 15-20% possible upside.
