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Microsoft's closing price hit a record high, but it may have been overbought.

Microsoft's RSI has reached 72.75, which means the stock has been severely overbought and may be due for a pullback.

Microsoft (MSFT) stock price hit a new all-time closing high. However, there may be some short-term fluctuations in the stock.$Microsoft (MSFT.US)$

At first glance, microsoft's stock price seems unstoppable - rising 1.1% to $360.53 as of the close on November 7, surpassing the high of $359.49 set on July 18. In addition, microsoft has risen for eight consecutive trading days, becoming the longest upward trend since January 28, 2021.

Thanks to the boost from its Azure cloud business, microsoft's revenue and sales performance have been outstanding, with the stock rising by 3.1% on the trading day after the release of the third-quarter report.

In addition, the rise in Microsoft's stock price is not only driven by revenue, but it has already surpassed its peers since the weakness in technology stocks in August and September - starting from the end of September, the stock has risen by 15%, surpassing the gains of Amazon (AMZN) (up 12%), Meta (META) (up 6.5%), Nvidia (NVDA), and Apple (AAPL) (up 6%), Alphabet (GOOGL) (up 0.3%), and Tesla (TSLA) (down 13%).$Amazon (AMZN.US)$$Meta Platforms (META.US)$$NVIDIA (NVDA.US)$$Apple (AAPL.US)$$Alphabet-A (GOOGL.US)$$Tesla (TSLA.US)$

Why are we worried when the stock price is performing well? This depends on Microsoft's 14-day relative strength index. RSI (relative strength indicator) is a momentum indicator that measures the strength of a stock or index. Generally speaking, the closer the index declines to 20, the greater the degree of oversold for the stock, and the closer the index rise to 80, the stock is in a severely overbought state. At the same time, an index below 30 means that the stock may rebound, while above 60 indicates that the stock may have a correction. Currently, Microsoft's RSI has reached 72.75, which means that the stock is severely overbought and may soon have a correction.

Of course, Microsoft, with its long-term potential, is worth buying. The company has many advantages, including the momentum of its cloud business after the ChatGPT upgrade on November 6. The potential pullback in Microsoft's stock price simply means that investors may get better buying opportunities in the coming days.

Regardless of what happens, Microsoft is still Microsoft.

By Ben Levisohn

Edited by Yan Cao

This article is originally from Barron's China and should not be reproduced without permission. The English version appeared on November 7, 2023, titled "Microsoft Stock Hits Record High. Why Its Next Move Might Be Lower."

(This content is for reference only and does not constitute any form of investment or financial advice; the market carries risks and investment should be cautious.)

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