Microsoft Corp. - MSFT - close: 25.54 change: +0.31 stop: 23.25

Why We Like It:
After a painful sell-off in early summer shares of MSFT, one of the biggest technology companies on the planet, have found support. The stock has been consolidating sideways the last few months with a neutral trend of higher lows and lower highs. That has changed recently with MSFT's breakout higher. There is still some resistance near $25.50 but overall it looks like the bottom is in.

Investors have been focused on the tech sector for growth and while MSFT is a very mature company they still offer a lot of potential. I am suggesting new long-term call LEAP positions now. However, depending on your trading abilities, you can fine tune your entry point. If you're nimble enough you could try and buy a dip near the $25.00 or $24.50 levels. Or if you want to see more confirmation of the move higher you could wait for a close over $25.50 or even $26.00.

The $28.00 level could be significant resistance as would the 2010 highs near $31.50. Long-term my upside target is $31.00. FYI: MSFT is due to report earnings on Oct. 28th, after the closing bell. Wall Street expects a profit of 55 cents. Earnings reports can create a lot of volatility and more conservative traders may want to wait until after the report before launching positions. Remember, our time frame is nine to twelve months.

Company Info:

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential. (source: company press release or website)

Use the 2012 or 2013 January calls (Entry point - now, at current levels)

BUY CALL 2012 Jan $25.00 strike (MSFT1221A25) current ask $3.20

BUY CALL 2013 Jan $30.00 strike (MSFT1319A30) current ask $2.33

Chart of MSFT:

Weekly Chart of MSFT: