NEW BEARISH Plays

Microsoft - MSFT - close 24.35 change +0.44 stop 25.60

Company Description:
Microsoft Corporation is engaged in developing, manufacturing, licensing and supporting a range of software products and services for different types of computing devices. Its software products and services include operating systems for personal computers, servers and intelligent devices; server applications for distributed computing environments; information worker productivity applications; business solutions applications; computing applications; software development tools, and video games. It operates in five segments: Windows & Windows Live Division (Windows Division), Server and Tools, Online Services Division, Microsoft Business Division, and Entertainment and Devices Division.

Target(s): 23.50, 23.10
Key Support/Resistance Areas: 25.50, 24.75, 23.75, 23.00
Time Frame: 1 to 2 weeks

Why We Like It:
Microsoft was downgraded by Goldman Sachs yesterday and Janney today from Buy to Neutral, citing limited upside in share value due to an elongated PC refresh cycle and a newer threat from tablets where windows does not have a presence. The stock has been underperforming the broader market for months and I view today's bounce as a shorting opportunity. Let's use a trigger of $24.65 to initiate short positions. Our targets are -4.5% and -6% lower than our entry.

Suggested Position: Short MSFT stock if it trades to $24.65

Options Traders: Buy November $24.00 PUT, current ask $0.81

Annotated chart:

Entry on September xx
Earnings: 10/28/10 (unconfirmed)
Average Daily Volume: 60 million
Listed on October 5, 2010