Tuesday, February 22, 2005

Microsoft Recommendation Update

Microsoft is getting pretty close to giving a valid break of the uptrend line. A valid break usually consists of a close below 3% of the uptrend line. That would mean that MSFT would have to close at $24.98/share for the uptrend break to be considered valid. MSFT is currently trading at $25.48, which gives the position about 2% more wiggle room. This level is pretty close to where the 50 and 200-week moving averages are hanging out. I would consider a valid break of those two indicators reason to sell out of this position. I will keep you updated.

P.S. I see Ron over at Technically Speaking (Used to be Ron's Stock 'n Stuffer World) has jumped on my MSFT trade bandwagon (Just Kidding). He's long at $25.66 with a tight stop. I hope it works out for everybody.

Addendum: I would get out of this position. Today (2/22/2005) MSFT closed at $25.23, which is below the 200-Day Moving Average. It is on lower volume, but it is better to be safe then sorry as the children's saying goes.

This is why I recommended only a 1/2 position. The investment/trade looked very promising, but it had not broken out to the upside yet. You should always wait for a clear break to the upside to get 100% all the way in.

As always, we will be watching and waiting.

Best Regards,

The Soothsayer of Omaha

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