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Microsoft is Earning its $1 Trillion Valuation

John Jagerson and Wade Hansen

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This morning, we’re recommending a bullish trade on Microsoft (NASDAQ:MSFT).

We were watching and waiting all last week to see if the S&P 500 would pull back after its incredible surge higher, but the index held on to all its gains. It didn’t produce any more gains, but it didn’t give any of its previously earned gains back either.

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This is encouraging for us as we look to enter new trades on some of our favorite stocks in our portfolio. Today, we want to take use this opportunity to collect income on MSFT by selling put writes.

A Tech Company Providing Consistency

MSFT has been one of our favorite stocks for quite a while now because of its consistency. Regardless of the economic and geopolitical turmoil and uncertainty the market is facing, MSFT finds a way to deliver. That’s why the company has a $1 trillion valuation. Traders are looking for consistency right now, and they’re willing to pay for it.

We saw this consistency highlighted again last Thursday when the company declared that it would continue paying a quarterly dividend of $0.46 per share. This puts MSFT in a rare category of companies that are growing and paying strong dividends at the same time. Traders can’t get enough of this one-two punch.

Retesting Support at $129

The stock completed a strong bullish “wedge” continuation pattern in early June, and it has been consolidating above the $130 price level. The $130 level served as resistance for the stock in late April, after the company released its most recent earnings announcement.

Daily Chart of  Microsoft (MSFT) — Chart Source: TradingView

We wouldn’t be surprised to see the stock consolidate for a little while. MSFT may even drift a bit lower to retest former resistance to see if it will hold as new support. However, we think $129 will hold as support now that MSFT has turned around.

That makes it a good strike price for a short-term put write trade.

To find out which MSFT puts we’re selling — and to get access to our full portfolio of income-generating trades — consider signing up for risk-free trial subscription to Strategic Trader today. 

InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of Strategic Trader.

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