2022/03/10 (017) Technical Analysis – MSFT

MSFT a long-term conservativ tech basic investment?
„If the market creates a W trend reversal formation into this summer,
we should get a massive buy signal generated by autumn 2022 at the latest!


US Securities and Exchange Commission investigating possible insider trading case In the course of Microsoft’s multi-billion acquisition of Activision Blizzard, the US Securities and Exchange Commission is investigating three investors. They are accused of massive insider trading.

According to a Wall Street Journal report, film and music executive David Geffen, along with Barry Diller and his stepson, Alexander von Furstenberg, together spent more than $108 million to purchase Activision Blizzard stock at $40 a share on Jan. 14. When Microsoft’s merger plans were announced on Jan. 18, those shares rose 26 percent to $82.31, leaving the three investors with an unrealized gain of about $60 million. The value of these shares could increase even further if the merger goes through at Microsoft’s proposed price of $95 per share.

The US Department of Justice is now investigating whether the deal violated insider trading laws. The background to the allegations is that Barry Diller and Activision Blizzard CEO Bobby Kotick sit on the board of directors of Coca-Cola. An SEC filing confirms that Kotick has been in talks with Microsoft about a potential acquisition since Nov. It was announced last week that Kotick will step down from his position on Coca-Cola’s board of directors later this year.

Diller denies allegations

However, Diller denied having received any information about the merger plans to the Wall Street Journal. “We have not acted on any information from anyone. It’s one of those coincidences.” JPMorgan, which orchestrated the private stock option sale with the three investors, is currently required to report evidence of potential market manipulation. Concurrent with the insider trading allegations, the SEC’s investigation into Kotick’s handling of allegations of workplace misconduct continues. In addition, the management of Activision Blizzard is faced with a class action lawsuit by shareholders who accuse the board of only wanting to merge with Microsoft to gain significant financial advantages for themselves. In addition, the merger is said to have not been properly evaluated by an independent committee. However, a verdict is still pending.

Microsoft CFO Amy Hood answered some compelling questions at Morgan Stanley’s Technology, Media and Telecom Conference on Tuesday. Among other things, the moderator asked whether Hood expected the current transformation trend towards more software use, automation and the cloud to weaken due to the Ukraine war or the inflationary cost pressure on customers. “The fact that customers around the world need to fundamentally modernize their business processes in order to enable growth and competitiveness is what I believe is the basis for the current demand,” said Hood. This trend, which the Microsoft CFO calls “digital transformation”, cannot be slowed down by rising raw material, energy or labor costs. “Because the best way we know of to help our clients control costs, work more efficiently, and get the most impact from every dollar spent is through technology,” Hood said. The Chief Financial Officer also went into detail about the impact of the halt to sales of new Microsoft services and products in Russia. According to Hood, the Russian Federation accounts for less than one percent of total sales.

It seems that we have found a picture book-like introduction with this MSFT trading capability

After a strong Wednesday and a price gain of 4.6 percent, Microsoft shares went down again on Thursday. Important chart-technical buy signals move back into the distance. Only with a breakout above 300 dollars does the chart for the Microsoft share brighten up again. Because $300 is not only a psychologically important mark – the horizontal has also often marked clear support or resistance in the chart in recent weeks. In addition, the 200-day line runs here,overcoming which could give a clear signal for a sustainable trend reversal. On the downside, the horizontals continue to provide support at $280 and $272 respectively.

The majority of analysts also believe that Microsoft shares can break $300 – the consensus target is currently $373.80. It is noticeable that hardly any expert has stamped his price target or his investment recommendation in the recent phase of weakness. The analysts seem to be expecting continued excellent operational development from Microsoft.

Of 52 analysts, 48 see the stock as a buy, 4 experts recommend holding the stock and none advise selling it.

Microsoft shares remain a basic investment for long-term tech investors. However, follow-up purchases are not indicated in the current market environment. A trend reversal and a break above $300 will give the signal to complete a mid-term trend reversal formation. What would open the door until old new Athighs.