Microsoft Corp. (MSFT:NASDAQ)
Price at Preparation: $410.92 (Feb 3rd, 2025)

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What they do

Microsoft Corp (MSFT:NASDAQ) develops and supports a range of software, services, devices, and solutions. It operates as follows:

  • Productivity and Business Processes: Comprises products and services in the portfolio of productivity, communication, and information services of the company spanning a variety of devices and platform.
  • Intelligent Cloud: This is the public, private, and hybrid serve products and cloud services of the company which can power modern business.
  • Personal Computing: Products and services geared towards the interests of end users, developers, and IT professionals across all devices. The firm also offers operating systems; cross-device productivity applications; server applications; business solution applications; desktop and server management tools; software development tools; video games; personal computers, tablets; gaming and entertainment consoles; other intelligent devices; and related accessories.

Welcome back to the Theta Bandits Top Pick Tuesday, where we search the markets to bring you fresh ideas that could be a potential winner in any portfolio.

Microsoft Corp. (MSFT:NASDAQ) is considered a “blue chip” stock that over the last year has traded places with both Apple Inc. (AAPL:NASDAQ) and Nvidia Corporation (NVDA:NASDAQ) for the title of the worlds most valuable company, with all three having a market capitalisation greater than $3T USD. This company is really part of the building blocks of today’s society and used in everyday ways you will probably not even realise anymore, for example in the growing use of AI over the past few years. As such, over the past year the stock has consolidated in a range and post their quarterly earnings report (ER) last week, which even though beat expectations it is showing weakness and sitting in the lower part of the range and at a price that looks promising for a potential upside.

We are not the only ones to have this view, a second data point to consider is the analyst street consensus, which has 57 Buys, 3 Holds, 0 Sells with 12-Month Price Targets (PT) as follows:

  • Low: $425.00 USD (+3.43%)
  • Average: $508.50 USD (+23.75%)
  • High: $650.00 USD (+58.18%)

Plan

As usual, find the chart below with following colors marked:

  • Blue: 52-week high.
  • Red: 52-week low.
  • Green: 12 Month PTs (high / avg / low).
  • Orange: Support/resistance lines.
  • Yellow: Our plan.

The included visual aid below has a few pieces of information on it, some which you have seen before such as the blue and red lines for the 52-week high and low and green to indicate the 12-month PT for low, average and high. Let’s get into the yellow markings.

First, on the left of the chart, there is the line up which was the previous breakout, which leads to the second phase of the horizontal line marked “ consolidation range” – this is because over 2024 and the start of 2025, even though we have had movement up and down, there is a clear range to the top and bottom which could not be broken and the price from a year ago to today is not very different. Third, usually after a consolidation we get a breakout, which is what we are looking for.

Keeping in mind the range mentioned, notice the current price while at the bottom end of the range is not quite the bottom. There are supports indicated for supports to indicate buy points. Three points of the current price of $410.92 USD, $397.97 USD and $385.58 USD are called out as potential spots to potentially buy shares. Below $385.58, I personally would not give the position too much rope before cutting the position, take the loss and move to the next trade – although this decision needs to be determined by your own trade risk profile.

Once in the trade, those familiar with our methods know we like to mitigate risk on everything. This can be achieved by securing as much of the original investment as possible, until there are only profits remaining to do the heavy lifting for the remainder of the trade. This leads us to look at the “targets” section, where the price action should push the stock price up to the top end of the range. For those looking at this as a trade only the resistance lines at $433.98 USD, $447.70 USD and $456.77 USD are good places to secure partial profits. Using profit, we could look to hit the previous 52-week high of $468.35 USD and above, keeping in mind the 12-month average PT is $508.50 USD. As always, protect your initial investment by setting and updating stop-losses as the price moves through resistance lines.

This is only one method how to trade this stock. We discuss other potential methods of attack through our Theta Bandits Discord Community; a hub for traders to ask questions, share ideas and strategies on various other tickers daily. For those joining the discord from this newsletter, we are offering a limited time special: 20% off the discord monthly subscription for 6 months with the coupon “SUBSTACK20” – When we trade together, we learn together!

RISKS

The goal is to grow capital by securing profits along the way and limiting losses. Make sure to plan to trade within your risk tolerance, allowing time for success while updating limits and exit points to mitigate risk.

If you’ve been finding our picks helpful, imagine what trading live holds. You know what to do 👇

Disclaimer: This article is for informational and educational purposes only, not investment advice. We recommend researching and consulting with a financial advisor before making investment decisions. All actions based on this information are at your own risk.

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