Microsoft Corporation Shares Still Powering Higher

Microsoft Corporation MSFT stock has been leading the market higher for an extended period of time now and there's no signs of letting up.

Microsoft shareholders are currently being rewarded for the extreme patience they displayed from 1999–2009, when the company's stock badly lagged the market. Since 2009's low of $15, however, the stock is up over 300 percent and is showing the potential to move even higher in the weeks and months to come.

What The Bulls See

• A very strong price chart with Fibonacci targets north of $50.
• An immaculate balance sheet, huge cash flows, eye-popping profit-margins and reasonable valuations (based on the PEG ratio of approximately one based on next year's projected EPS growth).

What The Bears See

• A company with a recent history of lacking new innovations, which then mean that the company's valuations may be a stretch.
• Iffy valuation metrics: price-to-sales is fairly reasonable at 4.36 (but not cheap) and the price-to-book ratio is a bit expensive at 4.21.
• A stock that is overbought on a daily and weekly chart basis.

Technical Update

Microsoft continues to be a market leader right now and it looks to technicians like that trend will continue at least until shares reach upside projection at $50.31. That level represents the 161.8 percent Fibonacci price projection line for this rally, which appears to be the third leg of a five-leg upside sequence.

Once that target is hit, technicians are anticipating a period of consolidation for the stock, but the downside pressure should be moderate in nature. The downside projections from the $50.31 peak are in the low to mid-$40s, with a move down to the 2007 peak in the upper $30s being a severe pullback scenario.

Technicians say that Microsoft has to be considered a top "buy the dip" candidate. The trick is to identify when in the "dip" phases of the market is the best time for the bulls to pull the trigger.