Apple Vs. Microsoft: A Race To New All-Time Highs

Zinger Key Points
  • March has seen both stocks find support, and both are showing signs of a recovery. Apple has recovered by 18%, Microsoft by 16%.
  • Both are still trading in consolidation and have yet to break out and create new all-time highs. 

Apple Inc AAPL and Microsoft Corporation MSFT are brand names you will of course be familiar with — and two tech giants whose stock prices have moved 600% since 2015.

Regardless of what you may think of the products or the opinions you have regarding the fundamentals behind the companies, these two stocks are excellent examples of "the trend is your friend until the bend at the end," with no bend in sight. 

As you would expect, there have been pullbacks that are integral to the structure of the trend, but no "bend at the end" as per the bear markets of 2000 and 2008. 

Unlike several other tech stocks that saw significant declines at the start of the year — for example,

HubSpot Inc HUBS dropped by a massive 56% — Apple and Microsoft held up well, declining by 18% and 23%, respectively. 

March has seen both stocks find support, and both are showing signs of a recovery. Apple has recovered by 18%, Microsoft by 16%. Both are still trading in consolidation and have yet to break out and create new all-time highs. 

If the market and the indices continue to recover and push back to their all-time highs, we will likely see both of these tech stocks breakout and print new all-time highs. The S&P 500 and the Dow Jones 30 are now trading above their daily 200 simple moving averages. The Nasdaq 100 is following suit and attempting to break back above its daily 200 simple moving average. 

In my article yesterday, I explained how I look for stocks breaking out from a lengthy period of consolidation. The longer the consolidation, the bigger the trend that could emerge through the rest of this year, and the more profit we will accumulate from holding and compounding. This is the essence of trend following. Less is more. 

Let's look at some charts. 

Apple

Below I have the daily timeframe. The price has been trading in consolidation since January this year and is closer to breaking out and printing new all-time highs than MSFT, but notice how the trend regularly pulls back to the daily 200sma (black line). 

Microsoft

Below I have the daily timeframe. The price has been trading in consolidation since November 2021 and requires more work to breakout before printing new all-time highs compared to Apple. Note that the trend is far smoother than Apple, with the price being well-supported by the 20sma (blue line) and the 50sma (orange line). Ideally, this is what you want to see in terms of price movement in a trend. 

The question is, do you jump into Apple if it breaks out first and ride out the bumps and the swings, or apply patience? Or wait for Microsoft to break out and ride a much smoother trend?

I know which stock I prefer. Patience is a skill that is very much underappreciated in today's online investing world. 

Posted In: Long IdeasEducationFuturesTechnicalsMarketsTrading IdeasGeneral