Microsoft: Overvalued but Still Bullish - Watching the 400–450Microsoft NASDAQ:MSFT
1. Quick Trade Plan (for those who want levels first) 🎯
Market Bias: Long term bullish, but in a late phase of the cycle.
Strategy: Don’t chase highs; buy the correction.
📌 Buy Zones
Primary Buy Zone: 400–450 USD
Strong support cluster and the preferred accumulation zone.
Aggressive Early Entries:
450–470 on sharp dips, but main focus remains 400–450.
⛔ Invalidation Level
345 USD
A break below this level invalidates the mid term bullish structure.
🎯 Take Profit Targets
TP1: ~600
TP2: 680–720
Potential completion of the final fifth wave.
🧭 For Current Holders
Continue holding while above 345.
Use a protective stop below 345 if trading shares.
Options traders may hedge instead.
🆕 For New Buyers
Avoid entering near ATHs.
Wait for the 400–450 pullback.
Use 345 as your hard-risk level.
2. Fundamental Overview: Great Business, Clearly Overvalued 💼📊
Microsoft has delivered very stable mid-teens growth for years:
Revenue growth: 15–17 percent annually
EPS growth: also 15–20 percent annually
Last 3 quarters: EPS +9–12 percent, revenue in the same range
This is a mature mega-cap, not a hyper-growth name.
⚠️ Buybacks Stopped
Company regularly bought back shares for six years
Stopped in March 2023 and hasn’t resumed
This removes a major EPS-boosting engine
📉 Valuation (Peter Lynch style)
EPS growth ≈ 15 percent
P/E ≈ 30
Stock trades at ~2x its fundamental fair value
Conclusion:
Amazing business. Predictable. Cash generative. 🔥
But fundamentally overpriced and in the late stage of its growth curve.
3. Technical Picture: Still Bullish, but Late in the Cycle 📐📈
📅 Long Term Channel Since 2010
Price has stayed inside a massive uptrend channel for 14+ years.
As long as MSFT remains inside it, the primary trend stays bullish.
📏 200-Day Moving Average
MSFT consistently bounces from the 200d MA on the weekly.
That keeps the structural bull trend intact.
🌊 Elliott Wave Context
Currently in the 5th sub-wave of a larger 3rd wave
Upside still possible
Potential final wave targets: 600–700
⏳ What Comes After
Once this major wave completes:
Expect a multi-year sideways cycle (5–7 years) as the market distributes the massive positions accumulated since 2009.
4. Current Structure: A Correction Is Likely Before New Highs 🔄
We already saw an A–B–C correction, but structure suggests another A–B–C, forming a zigzag, before the final move higher.
🎯 Why 400–450 Is the Key Zone
Major liquidity & support cluster
Aligns with channel midline and prior consolidation
Perfect area for a 5th wave launch
If MSFT hits 400–450 and bounces → 600–700 is back on the table.
5. What To Do Based on Your Situation 🧭
✔️ If You Already Hold MSFT
Stay in the trade while above 345
Expect volatility
You can hedge or use a stop below 345
🟦 If You Want to Enter
Don’t FOMO near the highs ❌
Wait for a pullback into 400–450
Start with partial size, add on confirmation
345 = hard stop
⚡ If You Trade Short Term
Shorts are counter-trend
Treat every drop as a tactical move, not a macro reversal
Unless 345 breaks
6. Final Thoughts ✨
Microsoft is still in a powerful long term uptrend, but:
Fundamentally overvalued
Technically late stage of its long cycle
Likely to give a clean buyable correction
Best accumulation zone: 400–450
Invalidation: 345
Upside targets: 600–700
It’s a “buy the dip, not the rip” market for MSFT.
Not financial advice — manage risk according to your plan.
