Microsoft: Overvalued but Still Bullish - Watching the 400–450

Microsoft 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.