I'm shorting Microsoft

I'm back home but still on vacation, although kind of working as well. At least I have more flexibility to do something interesting to me. Here is one thing I find interesting today: shorting Microsoft (MSFT). Well, MSFT is one of the positions in my retirement portfolio, meaning I like it and will likely hold it forever. It is a great value stock that I doubt I will ever sell it. I have bought and kept it for over 8 years and it is doing great to me with dividend reinvestment. As I have shown you, this is the stock which may make you as a millionaire if you are patient enough.

So what's the heck that I'm shorting MSFT now? Well, it is all due to technicals and a very short-term speculative trade. MSFT jumped almost 4% today due to the report that it has narrowed down its list for its next CEO. While I'm happy to see my existing position to jump higher as well, technically it is very much overbought short-term, which won't be sustainable (click the chart below to enlarge):
- It has jumped outside of its upper band of the Bollinger Bands (BB)
- It is away too far away from its 50 day moving average (DMV)
- And RSI is over 80, meaning overbought

All the 3 momentum indicators point toward an extreme overbought condition for MSFT. I don't think it can stay there without first giving back a good portion of its recent gain. I bet it will correct short term, a good target for shorting. That's what I'm doing right now: buy MSFT put options.

If you also have long-term MSFT positions as I do, you may also consider to sell its call options to lock in the gain you have seen.