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News
Is Amazon a best-buy for the holidays?
News
China stocks end mixed despite PBoC announcement
News
Asia stocks rise on prospects of Fed easing hikes
News
HP joins the tech layoff spree
News
Will the euro give the bulls 200 reasons to smile?
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Best Buy shares spike amid upbeat Q3 print

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Asset Watch

Is Microsoft sending a familiar signal?

 

Tuesday, November 1, 2022

Despite outperforming analysts’ first-quarter estimates on Oct. 25, weak Q1 guidance pushed Microsoft’s stock lower by nearly 8% the following day. Management said they expect revenue of $52.35 billion to $53.35 billion in Q2, which came in below the Wall Street consensus of $56.05 billion. Likewise, their implied operating margin guidance of 40% was below the 42% expectation.
CFO Amy Hood told analysts, “many of the macro trends from the end of the fourth quarter continued to weaken through Q1” and that “PC market demand further deteriorated in September.”
While Microsoft’s fundamentals have decelerated, will a repeat of the March and July technical patterns prove prosperous for the bulls?

During those bear market declines, volatility was abundant. However, as the negativity eased, Microsoft recorded higher lows before realizing sizable rallies. Moreover, with a similar pattern present now, Microsoft hit an intraday low of $219.13 on Oct. 13. That said, the earnings-related sell-off only pushed the stock to an intraday low of $225.78 on Oct. 27.

So, while the holiday earnings season may be relatively weak, relative strength is present from a technical perspective. And with November and December known for their bullish seasonality, Microsoft should perform well if the S&P 500 continues its ascent.

Could the third time be the charm or will inflation, rate hikes and a challenging macroeconomic environment prove too much to overcome?


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