Five Star Stock Watch: Microsoft

After rallying quite nicely over the last 3 months, Microsoft's stock dropped every day last week, falling from a high near $39 down to just below $36.

Investors are probably wondering when the slide will end, while others might be wondering when its time to buy. Judging from Microsoft's stock chart below, the selling might be close to ending . . . maybe.

Related: Five Star Stock Watch: Netflix

The company: Microsoft Corp.

Ticker Symbol: MSFT

Sector: Technology  

Industry: Business Software & Services

Microsoft develops, licenses, and supports software, services, and hardware devices worldwide. Its Windows division offers Windows operating system; Windows Services suite of applications and Web services, including Outlook.com and SkyDrive; Surface RT and Pro devices; and PC accessories. 

Please take a look at the one-year chart of Microsoft below with added notations:

Microsoft had formed a key 52-week high resistance at $36 that the stock eventually broke through in the beginning of November. It is not uncommon for stocks to come back down to retest previous breakout points and it appears MSFT is on its way back to the $36 level.

In addition, Microsoft's stock has also created a trendline of support starting back in September. That trendline is approaching that same $36 level mentioned above.

Related: Five Star Stock Watch: Google

Microsoft is set to release earnings on January 23, 2014.

No matter what your strategy, or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!