Positive comments from Bank of America (NYSE:BAC): Microsoft Corporation (NASDAQ:MSFT) was reinstated with a buy rating of $256 at BofA Securities. The software and service colossus has a consensus target of $239.37. At midday the stock is up 2.2% putting at the top of the Dow Jones Industrials gainers list. This impressive move has driven MSFT to new December highs. We believe the stock is setting up for a fresh rally leg.
MSFT has been trading inside its September range since Sept. 21. Earlier in the month the stock printed a new all-time high after taking out the August peak. MSFT’s consolidation that followed has included three straight higher monthly lows. Despite a powerful post election breakout (+4.8%), and a big ‘vaccine’ news ramp, MSFT has remained range bound. Later in the month, the stock filled the big 11/4 upside gap, which has also held the December lows. This area ($209) is a very solid support zone that should provide the footing needed for a run back up to all-time high territory.
On the downside, a close back below $208.00 would be a clear warning sign that more sideways action is ahead before new highs can be reached.
Note: We are long MSFT in most managed accounts.
You can read Gary S. Morrow's original post here.