Stock Of The Day – Is Microsoft Going To Lead The Magnificent Seven Higher?

Microsoft Corporation MSFT stock is giving back some of its gains on Thursday.  On Wednesday, it rallied by more than 10% as the stock market made a historic move higher.

Some analysts would consider Microsoft to potentially be the strongest of the so-called Magnificent Seven stocks. This is why our team of technical analysts and trading experts has made it our Stock of the Day.

Many technical analysts use moving price averages in their analysis. A simple moving average price is the average closing prices of previous days. For example, a 40-day simple moving average is the average closing price of the previous 40 days.

It peaked approximately 40 days ago, before the market went into meltdown mode. This is why some analysts are watching the 40-day average. If a stock exceeds this price, it could be a signal that the recent downtrend has ended and a new uptrend may be forming.

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Despite Wednesday’s epic rally, six of the Mag Seven stocks remain below their 40-day moving averages. But Microsoft reached it.

The black line on the chart shows what this average price is as the market progresses. As you can see on the chart, Microsoft briefly exceeded and then closed right on this average. Some would say this puts it in the strongest position of these seven stocks.

If the shares continue to move higher, there’s a good chance they will encounter resistance around the $395.00 level. This is where they peaked in late March.

Some people who bought shares then regretted doing so when the price fell after. Some want to get out of these losing positions but don't want to lose any money. So, if the share climbs back to $395.00, they will likely place sell orders.

This will allow them to exit their positions at breakeven.

If there is a large enough quantity of these sell orders, they could form resistance. If Microsoft reaches this resistance again, the move higher may pause or even end.

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