Technology’s Great Spring Stock Sale
With shares of Microsoft (NASDAQ: MSFT) pulling back by more than 2% to finish in oversold territory, and shares of Google (NASDAQ: GOOG) closing lower for four out of the last five sessions and trading to new, two-week lows, traders and active investors alike who have been looking for an opportunity to buy these stocks at less than lofty levels will get another shot here in early April.
MSFT rallied to new highs in mid-March. But the failure of the stock to reach beyond those new highs during its advance at month’s end has brought out the sellers, who have sent shares to new, monthly lows ahead of trading on Thursday. The selling in Microsoft has earned the stock a short-term, positive edge of nearly 1%, although the stock’s rating remains unchanged in neutral territory. Note that the last time the stock pulled back to oversold levels in the second half of March, two days with a rating of 7 out of 10 – one point below Microsoft’s current rating – anticipated a rally in MSFT of more than 2% over the following three days.
Shares of Google are not yet trading in oversold territory, despite Wednesday’s drop of more than one percent and the on-going, multi-day pullback. That said, any significant selling on Thursday will almost certainly take GOOG to technically oversold levels. GOOG was last short-term oversold at the beginning of March when a three-day correction led to a 2% gain in a week.
Google’s short-term edge of less than a quarter of a percent suggests that the stock could have further to fall before becoming historically attractive to short-term buying interest. Like Microsoft, Google shares a neutral, 6 out of 10, rating ahead of trading on Thursday.
Already trading oversold as of midday on Wednesday, shares of Cisco Systems Inc. (NASDAQ: CSCO) have pulled back for the past two days in a row as traders take profits from the stock’s rally to new, 52-week highs at the beginning of the week. In addition to retreating to oversold territory, shares of CSCO are trading at new, two-week lows, and are trading with a short-term edge of more than three-quarters of a percent. CSCO is set to open Thursday morning with neutral ratings of 6 out of 10, two points shy of our “consider buying” category.
Cisco has not traded with ratings higher than 7 since late January. But a trio of 7 ratings days in early March, part of a multi-day pullback into technically oversold territory, did lead to gains of more than 4% less than a week later.
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David Penn is Editor in Chief of TradingMarkets.com