This post was just published on ZYX Buy Change Alert.
MSFT reported earnings that are less than the consensus. The stock is being punished hard. It is down about $5 which is a lot for this blue chip.
Wall Street is reacting to headlines. However, digging below the surface there is a nice positive surprise. The earnings miss was due to one-time items, primarily taxes.
Normally, this would have caused us to issue a strong buy. However, there is also a big negative in the earnings report. MSFT has been trading at a high valuation due to its progress in the cloud. During the last quarter, cloud revenues are below our expectations.
What To Do Now?
Those in the long-term position may consider continuing to hold.
Those not in the long-term position may consider waiting for a dip into the buy zone shown in the Model Portfolio table.
Those who started a trade around position per the last post may use stops on one-half of the position in the zone of $45.5 to $46.43. Target for the trade around position is $54.73 to $56.48.
A note for new subscribers, please see Trade Management Guidelines to see how trade around positions can potentially double your returns.
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