t2K - hey, your analysis of MSFT price movement is getting damn good! Are you becoming a full-time trader or what<GGG>?
Basically I agree with most of your take on this, except I think the market influence will also be a strong factor. As we near the end of June, I fully expect some kind of market sell-off in anticipation of AG raising rates at the meeting. However, tech stocks have been pretty badly oversold recently, so they are scheduled for some kind of rally, which has to happen ahead of that meeting. Therefore, short term, I think you'll see a good move from MSFT, though not breaking 90, IMO. How strong that move is, we'll see next week - if you noticed, today's move happened on disappointing volume... contrast that with INTC, which I've picked up together with CSCO at the recent lows (see my post #23390).
Are you sure the recent news from the trial is so bullish? One statement from a gov. witness about the monopoly seems to me not quite enough. If I had to bet right now, I'd lay my money on there being a finding that MSFT is indeed a monopoly in the desktop O/S market. Remember, MSFT is putting on its rebuttal dog and pony show, and it seems they have gotten some good licks in, but that's almost expected (only a surprise as a contrast to the catastrophic incompetence of the MSFT defense team before the recess). The show is far from over and the fat lady hasn't even arrived on the stage, let alone done any singing.
As to the earnings run-up. I have a strange feeling - which I can't fully justify - that the run, such as it will be, will be far weaker than in the past. I base that on the generally unfriendly atmosphere when it comes to high p/e. I could be all wet, but I suspect that the market wants to see MSFT with a p/e below 60 - the super high p/e is going out of fashion. If there is a generally luke-warm expectation for Office 2K sales, then there may be less enthusiasm about running up the stock. Therefore, barring extraordinarily good news coming out of the trial, I don't expect MSFT to break the 95 high ahead of the earnings. Look at the technical damage done to MSFT in the 80s - sure you could say all techs sold off, but I don't believe f.ex. CSCO got as hurt.
Anyhow, unlike the analysts, I think MSFT will do extremely well next year - and my target is 140 by April 2K - less than 12 months from now (in contrast to ML's 86 by June of 2K!). This year will not be as strong, simply because the stock needs to recover from the recent damage, the economy needs to see its way out of the inflationary fears, Y2K nonsense needs to pass etc, etc, etc. Bottom line - I'm expecting MSFT to do brilliantly over the next 2-3 years.
Morgan |
