Software giant Microsoft Corporation (MSFT) is a component of the Dow Jones Industrial Average that has been one of the best performing stocks so far in 2018. Microsoft shares closed Monday, Sept. 10, at $109.38, up 27.9% year to date while the Dow 30 is up just 4.6%. The stock set its all-time intraday high of $112.78 on Aug. 31 and is trading between my quarterly value level of $105.06 and my risky level for September at $114.85.

Microsoft has become a diversified technology stock by expanding from Windows software. The company's cloud computing platform Azure is gaining market share, and its Xbox gaming platform remains popular. Microsoft has also been a strong player in social media since its acquisition of LinkedIn. Furthermore, fans of the Surface Pro are looking forward to the latest version of this popular computing platform. (See also: Microsoft Prepping a Dividend Surprise: MS.)

The daily chart for Microsoft

Daily technical chart showing the performance of Microsoft Corporation (MSFT) stockCourtesy of MetaStock Xenith

Microsoft has been above a "golden cross" since Aug. 15, 2016, when the stock closed at $58.12, which justified adding to a core long position for the stock. A "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving average, indicating that higher prices lie ahead. The stock has been tracking its 50-day simple moving average higher all year long, with the level now at $106.85.

Microsoft stock is well above its semiannual value level of $94.10, which is the horizontal line in the middle of the chart. The third quarter began with a quarterly pivot of $105.06, which proved to be a level at which to buy between July 13 and Aug. 2. The stock set its all-time intraday high of $112.78 on Aug. 31, and my monthly risky level for September is above the chart at $114.85.

The weekly chart for Microsoft

Weekly technical chart showing the performance of Microsoft Corporation (MSFT) stockCourtesy of MetaStock Xenith

The weekly chart for Microsoft is positive but overbought, with the stock above its five-week modified moving average of $107.84. The stock is well above its 200-week simple moving average, or "reversion to the mean," at $65.18. The 12 x 3 x 3 weekly slow stochastic reading is projected to end this week at 82.32 versus 82.52 on Sept. 7, with both readings above the overbought threshold of 80.00. A close this week below $107.84 with the stochastic reading declining below 80.00 would result in a downgrade to a negative weekly chart.

Given these charts and analysis, investors should buy weakness to my quarterly and semiannual value levels of $105.06 and $94.10, respectively, and reduce holdings on strength to my monthly risky level of $114.85. (For more, see: Microsoft Turns to Subscription Model for Xbox.)

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