The broad conditions for equity buyers remain in place. Easy central bank monetary policy and broad fiscal stimulus mean conditions are suitable for further equity gains. Also, tech stocks that form part of the Nasdaq 100 have seen great gains due to COVID-19 induced lockdowns. However, investors need to be aware that markets have been trading at elevated levels and are struggling to make new highs despite strong earnings.
Will Microsoft move higher in keeping with its very strong seasonal pattern this year? Over the last 15 years, Microsoft has gained in value twelve times between June 09 and June 19. The largest gain was in 2009 with a 9.01% profit. Will some of these gains be repeated again?
Major Trade Risks:
- The main risk to this trade is from any risk-off tones which will weigh on equity prices.
- A fast rise in US inflation could result in bond tapering which would potentially weaken Microsoft Co’s share price if US interest rates are expected to rise.