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Will traders sell the news of Microsoft‘s big, software update for its Xbox 360?
A software update that is slated to bring a new features like video from Google’s YouTube and HBO, as well as the ability to watch on-demand programming from Comcast is scheduled for Tuesday.
While the software upgrade will fall short of putting out a new version or whole new edition of the console, the new enhancements do help the Microsoft’s Xbox 360 continue to make progress toward being an ever more comprehensive digital media/entertainment in-home device.
So should you buy the stock or sell it?
Shares of Microsoft (NASDAQ: MSFT) have managed to move higher over the past week despite closing lower for nearly half of the past few trading days. Up nearly 2% on Monday, the stock is trading just outside of overbought territory and just below its 200-day moving average.
Microsoft earned a “consider avoiding” rating of 3 out of 10 a week ago, and the stock has been under on-again/off-again selling pressure since then, finishing lower for two out of the next three days. That said, the stock rallied to trade at new short term closing highs in Monday’s session, and has a low, neutral 4 out of 10 rating as of Monday’s close.
MSFT has been a relatively low volatility stock, with extreme ratings to the upside (8, 9, or 10) and downside (3, 2, and 1) being relatively rare. Before the stock’s most recent downgrade to 3, MSFT had last earned a significant ratings change in late August (a 3 out of 10) and before that, a pair of 3 ratings in March. In both instances, MSFT was trading lower five days later.
Ahead of trading on Tuesday, the short term edge in Microsoft is to the downside. And with the potential catalyst of the Xbox 360 software update, the potential of traders to take advantage of the fanfare and begin heading for the exits is high. That said, even if the stock does continue to gain over the balance of the week, waiting for a pullback to take prices lower before buying remains the most prudent approach for short term traders and active investors alike.
The stocks in today’s report were drawn from the data and research available through PowerRatings. To find out more, click here.
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