Microsoft Sold

Once I ran to you
Now I'll run from you
--Soft Cell

Unloaded my Microsoft (MSFT) position into this morning's lift. This position was built ahead of the signing of the debt deal. MSFT was trading well in a drekky tape and the thesis was that any relief rally would find MSFT leading the way higher.

Instead, the debt deal was met with a nasty sell off, and renewed probs in the EU opened the trap doors. MSFT went down the drain w/ the tape. Important lesson: a stock can trade great...until it doesn't...

After lugging this position thru the morass of the past two months, I feel fortunate to have salvaged a profitable shekel or two on the trade.

MSFT is now back up to where is was before the collapse. Can it go higher? Fer shure, dude. But resistance looms directly above, and to me there's more downside than upside in the name.

Although I became bullish on MSFT on a valuation basis early in the year, I have revised my view given the darkening macro context. That context has me thinking that MSFT is no great value here, since a slower economy may drag cash flows significantly lower.

MSFT's current enterprise value is about $190 billion. My interest will be rekindled if EV reaches gets down to the $120-130 zone, or 1/3 off the current price.

no positions