MSFT Death Cross Crisis ! Buy / Sell Now ?
$Microsoft(MSFT)$, the heavyweight of Big Tech, has hit a grim milestone in technical analysis: a Death Cross.
What is a ‘death cross’ ? It refers to a bearish chart pattern when the 50-day moving average crosses below the 200-day moving average, signifying a potential shift from a bullish to a bearish trend.
With its share price slipping below key moving averages, MSFT stock has moved into bearish territory, casting doubts on its near-term prospects.
Is this just a blip for the software giant, or the prelude to deeper woes?
Bearish Signals All Around
On Mon, 25 Nov 2024, MSFT ended the day at $418.19.
Technical indicators are sounding alarms:
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MSFT stock price trails its (a) 20-day at $418.73, (b) 50-day at $421.65 and (c) even its 200-day at $421.81 - simple moving averages (SMAs). (see above)
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All these point to a bearish signal.
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The 8-day SMA at $417.37, continues to be driven by bullish sentiment over the short term, driven by buying pressure.
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The Moving Average Convergence Divergence (MACD) stands at -1.11, another red flag.
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The Relative Strength Index (RSI) at 49.09 suggests that Microsoft is not oversold yet but is heading toward bearish momentum.
These technical markers paint a strongly bearish picture.
Yet, buying pressure persists, indicating that investors still see potential for a turnaround, a glimmer of bullish hope amidst the gloom.
ProPublica Bombshell
Compounding Microsoft's technical woes is a ProPublica investigation that has raised ethical and legal concerns over the company’s federal contracting practices.
As detailed in the report, Microsoft's "White House Offer" a supposedly altruistic pledge to bolster government cybersecurity, was a calculated business maneuver.
The plan involved providing (a) free upgrades and (b) consulting services to federal agencies, locking them into Microsoft's ecosystem.
Once the "free" period ended, agencies had little choice but to continue with costly subscriptions and Azure services, effectively squeezing out competitors.
This strategy not only (1) strengthened Microsoft's grip on federal business but also (2) invited scrutiny for potentially violating federal procurement and antitrust laws.
Legal experts argue that the deal :
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Sidesteps open competition.
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Raise concerns about its long-term implications for government reliance on a single vendor.
What’s At Stake? A Double-Edged Sword
While the technical indicators signal bearishness, the buying pressure suggests a tug-of-war between short-term skepticism and long-term optimism.
Microsoft's market dominance—bolstered by its lucrative cloud business and strategic maneuvers—remains a formidable moat.
However, the ethical controversies surrounding its federal contracts could dent investor confidence and invite regulatory headwinds (more of this, see below).
The Verdict
Microsoft's Death Cross is a wake-up call for investors.
With the stock under technical pressure and the ProPublica revelations casting a shadow over its business practices, the path forward is murky.
Bulls might see this as a chance to buy on weakness, banking on Microsoft's resilience.
Bears, however, have a compelling case to remain cautious as the stock navigates this precarious juncture.
Microsoft's crossroads is a reminder that even the mightiest of tech giants are not immune to scrutiny—or the market's harsh judgment.
Sidetrack : this harks back to my recent post sharing that investors need to know when to sell or partial sell its top-growth stock. Is it MSFT’s time now ? (click here ! to read, Repost to share, Like as encouragement ok - tks).
Just in.
Perhaps the post on MSFT’s death cross is a prelude to the latest development ? (see below)
The US Federal Trade Commission (FTC) is investigating Microsoft for potential anti-competitive behavior.
FTC is looking into Microsoft's suite of products:
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Cloud computing.
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Software licensing.
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Cybersecurity.
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AI businesses.
FTC has sent a long request to Microsoft for information and is meeting with Microsoft's competitors to gather more details.
This investigation comes after a series of cybersecurity incidents involving Microsoft products, especially concerning its role as a major government contractor.
FTC's focus is on Microsoft's bundling of software and cloud services, particularly its popular Office productivity and security software.
FTC is worried that this bundling could harm competition and lead to higher prices or lower quality products for consumers.
Microsoft's cybersecurity issues, combined with its dominant market position, are seen as a major concern by the FTC.
The agency is particularly worried about the potential impact of a large-scale outage or security breach involving Microsoft's cloud services.
FTC's investigation is similar to the government's lawsuit against Microsoft in the 1990s, which accused the company of anti-competitive practices related to its Windows operating system and Internet Explorer browser.
Stock Price.
The ‘bad’ news could not have come at a better time - eve of Thanksgiving where trading would have been muted due to mass movement of people, making their way home to celebrate the festive occasion.
Coupled with the release of Fed’s preferred inflation report, that (to me) is stealthy creeping upwards especially the Core PCE - resulting in a festive-led US market to consolidate.
As a result, MSFT slipped -1.17%, ending the day at $422.99, down by -$5.00 per share.
Equally important, post hour trading saw the stock consolidating further by -0.24% or -$1.01.
It is anticipated that by the time half-day trading resumes on Fri, 29 Nov 2024, MSFT might be even lower.
The good news is that since beginning of December, things have looked up for MSFT.
It has ‘recovered’ from its low of $419.85, ending Wed, 04 Dec 2024 at $437.42.
Is it time to load up on MSFT OR take profit on a growth stock like MSFT - think before you leap !
Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.
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Do you think it will be a long drawn back & forth, before the antitrust law suit will be heard ?
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Do you think MSFT will be able to ride out this rough patch, that is not nearly half as bad as $SUPER MICRO COMPUTER INC(SMCI)$ repeated accounting malpractices ?
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$Microsoft(MSFT)$ time for me to take some profit or hold? What are your thoughts fellow tigers? @TigerTradingNotes
@TigerStars @CaptainTiger
Pls "Re-post" so that more get to know. Tks! Rating is important (to me).
Consider "Follow me" and get first hand read of my Daily new posts? Thanks!). Tks!!
Neutral, as everyone will use this till years to come ;(
Great article, would you like to share it?