Microsoft stock set a new 52-week high Thursday before pulling back slightly, but does that signal technology gains ahead as Google and QQQ also closed higher?
Carter Worth, chief market technician for Oppenheimer, urged caution on Microsoft’s strength.
“If you put that in context, it’s added $50 billion in market cap in five, six weeks. There are only 45 or 50 companies that are worth that much, and Microsoft just tacked that on in a very steep way,” he said. “Basically it’s time to be riding calls, trimming, doing something. It’s a big move.”
Looking at the stock charts, Worth said Microsoft would likely trade closer to the 52-week high for the next two or three months to set up for a breakout.
“But the first approach to a past top is invariably a better sale,” he said on “Fast Money.”
Microsoft shares hit $30.17 before retreating to close at $29.95, up 0.2 percent.
Shelter Harbor Capital’s Brian Kelly said he saw possibility for the stock but was “not sure they have the management to actually execute the plan,” he said, adding that he needed to see evidence from Microsoft CEO Steve Ballmer.
“It seems like they’ve had a lot of opportunities over the years to get a lot of different things done. They’ve been beaten at their game by Facebook, by Google, by a lot of different people, and here’s another chance that they could really do something right,” he said. “He has to prove it to me.”
Joe Terranova of Virtus Investment Partners said the stock likely lagged previously because money managers weren’t sure if it was a growth stock or a value stock, leading it to be underowned.
“You’ve got a market that’s moving in tortoise fashion, and that gets the attraction of Microsoft, the dividend yield, the tremendous amount of cash,” he said. “But most importantly — and think about this for one second — we have Microsoft trading close to $30. It in essence is $3 above its 50-day moving average.”
Jon Najarian, cofounder of OptionMonster.com, said options activity was bullish.
“It’s still getting about 2-to-1 calls to puts trading —127,000 calls to 61,000 puts — so, very strong activity, still pushing to the upside,” he said.
Looking at Google, Worth said the charts showed the stock slipping to a level of support — “which is to say a quick move, $100, 15 percent — all taking place this year, right down to the smoothing mechanism, 150-day moving average. And in principal, rebound potential is high. It’s one we like on the long side.”
“The parts, in aggregate, look healthy,” he said.
In the chart for QQQ, the technology ETF, Worth said a flattening top meant it was breaking out.
“It’s happening as we speak,” he added.
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Trader disclosure: On Feb. 2, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Terranova is long GOOG; Terranova is long JOY; Terranova is long TRLG; Terranova is long AXP; Terranova is long MUB; Terranova is long LQD; Terranova is long SBUX; Terranova is long CNX; Terranova is long SU; Terranova is long OXY; Terranova is long MA; Terranova is long MCD; Terranova is long SNDK; Terranova is long EMC; Terranova is long IBM; Terranova is long VRTS; Najarian is long AAPL; Najarian is long BAC; Najarian is long PNC; Najarian is long GS; Najarian is long GDX; Najarian is long MSFT; Najarian is long AK; Najarian is long PCX; Najarian is long RSE; Kelly is long GLD; Kelly is long TLT; Kelly is long XLF; Kelly is long KRE; Kelly is long KOL; Kelly is long SLX; Kelly is long XHB; Kelly is long MHK; Kelly is long USG; Kelly is long SPY puts; Kelly is short Yen;
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