Microsoft is one of the top Dow stocks this year, but the trillion-dollar tech stock could be at risk of tumbling.
Matt Maley, chief market strategist at Miller Tabak, sees worrying signs of a looming pullback in its charts.
"It's had this unbelievable move in recent weeks and recent months, and it's taken the stock to a very overbought condition. You look at its weekly RSI chart, it's got above 85. In fact, today it's probably reached 86. You have to go back all the way to 1997 to find a time where it's been more overbought," Maley said on CNBC's "Trading Nation" on Thursday.
Its RSI, or relative strength index, is a momentum measure that reads overbought or oversold conditions in a stock. A measure above 70 signals overbought conditions, flagging higher potential of a pullback.
"The thing is every time it's gotten above 80 in the last 20 to 25 years, it has seen some sort of a pullback, and that's usually almost always at least 10%. One time it was like 5% or 6%, but most of the time it's a full correction," said Maley.
A 10% decline would take the stock to roughly $166 from $185. That would erase February's gains.
"Don't sell the stock, but [investors] might want to hold off reaching and adding to the stock right here. And short-term traders might want to take a few chips off the table and look at going back into the stock at a lower level because it is getting right for that kind of pullback, and no stock moves in a straight line," said Maley.
Mark Tepper, president of Strategic Wealth Partners, says any weakness is opportunity to buy even more Microsoft shares.
"If it pulls back 10%, I'll be backing up the truck to buy more. The thing about these overbought stocks is that they can stay overbought for long periods of time, and I view that as a sign of good positive strong momentum," Tepper said during the same segment.
Tepper argues that its fundamentals should continue to fuel growth in sales and its stock performance.
"It's not that old, sleepy company of about a decade ago. They've evolved, they've shifted their business, now they're focusing around Azure and Office 365. You've got Azure growing at over 60% year over year, and growth is accelerating. You've got Office 365 growing at 30% year over year and accelerating," said Tepper.
Disclosure: Tepper and Strategic Wealth Partners have a position in Microsoft.