Locking in Big Gains on an Overbought Software Position
| Symbol | Transaction Type (Sell/Buy) | # Shares Traded |
|---|---|---|
| MSFT | SELL | 60 |
After you receive this alert, the Portfolio will sell 60 Shares of Microsoft ($MSFT) at or near $503. Following the trade, the Portfolio will own 310 MSFT shares, roughly 2.4% of its assets.
The continued strength in MSFT shares has not only pushed them past our $500 price target, but as you can see in the chart below, into a deeply overbought condition. While we recognize Microsoft stand to benefit as it monetizes its existing AI and data center backlog as well as OpenAI’s eventual IPO, the shares have climbed nearly 45% since their June low.
That combination points to them having run very far, very fast and arguably at least a wee bit ahead of themselves. When we’ve seen this with other companies and their shares in the past, it means some prudent action should be taken. And that is what we are doing on Tuesday, taking another slice of very profitable MSFT chips off the table.
Would we be open to re-building the position at lower prices? Subject to available cash on hand and other opportunities at the moment, yes we would.
Now turning to the Portfolio’s position in Eaton ($ETN), which has also pushed past our price target. Those shares are not yet in an overbought condition, but if that comes to pass, it would be a reason for us take some of those chips off the table with a gain near 50%. In the meantime, we are reviewing electric utility earnings calls and multi-year capex levels, which may lead us to fine tune our ETN price target. We may hold off until we get Boeing’s ($BA) July order and delivery data.
More Pro Portfolio
- We’re Initiating New Positions in 2 ETFs
- 29 Signals We’re Tracking Across 11 Portfolio Strategies
- July Monthly Roundup: Keeping Our Lead After a Wild Ride
(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade’s executed price here. Be sure to toggle the chart to sort by Purchase Date.)
At the time of publication, TheStreet Pro Portfolio was long BA, ETN and MSFT.
