Is Microsoft A Smart Bet For A Short-Term Trade?

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But now the race has a newly rejuvenated participant…

This week Microsoft (MSFT) unveiled their latest smartphone operating system dubbed Windows Phone 7 (WP7).  New handsets running WP7 from Samsung, LG Electronics, and HTC will go on sale in early November.

Wireless service in the U.S. will initially be provided by AT&T (T) and T-Mobile USA.  Sprint Nextel (S) and Verizon (VZ) are expected to begin offering WP7 handsets early next year.  In all, WP7 will be available through 60 carrier partners in 30 different countries worldwide.

The software giant hopes WP7 can reverse the company’s huge market share losses.

Just 15 months ago Microsoft owned a respectable 9.3% share of the global market.  At the end of June 2010, the company’s share had plunged to a measly 5%.  They’ve clearly dug themselves a hole by letting Apple and Google get a two-year head start.

I think WP7 will go a long way toward helping Microsoft catch up to the competition.

Here’s why…

The new phones are stylish and more appealing than previous windows-based smartphones.  The user experience is improved with Tiles replacing the clutter of individual app icons.  And business people will appreciate the integration of Microsoft Office and Outlook.

Of course, this raises an interesting question… Are Microsoft shares poised for a big rally?

If you look at a chart, you’ll see Microsoft is setting up for some kind of big short-term move.  I think it will be to the upside and I’ll tell you why in a moment.


The chart shows Microsoft is forming what’s called a symmetrical triangle pattern.  Most symmetrical triangles are continuation patterns.

However, in some cases, symmetrical triangles mark important trend reversals.  If this triangle is indeed a reversal pattern, we’ll see the shares break out on heavy volume to the upside.

I think an upside breakout’s coming…

We know the new smartphones running Microsoft’s WP7 software are about to hit the market.  The positive buzz around this event should attract investors.

It’s definitely a catalyst that could send the shares surging higher in a short-term rally.

If you’re looking for a short-term trading idea, take a closer look at Microsoft.  I think there’s a good chance to make a solid 15% to 20% return in relatively short order.

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