Holding $19 Billion in Bitcoin, MicroStrategy Proves to Be Major Election Stock Winners
What a difference a month can make. One month ago, I wrote about a potential breakout in MicroStrategy (MSTR) . At the time, shares were trading around $175. Given the wide trading channel preceding the breakout, the pattern required a high-risk tolerance.
Fast-forward one month, and MicroStrategy became one of the biggest election stock winners. Shares of the software firm, which holds more than $19 billion worth of bitcoin as a treasury asset, closed just below $271, approximately 54% higher over the past 30 days. That’s not a bad month.
Don’t get me wrong, it wasn’t an easy month. The stock experienced sharp pullbacks twice during the month of October. During a four-day period, shares went from $227 down to $185. Two weeks later, the stock fell from $267 down to $220 over five days. Disciplined traders likely captured some profits during the drawdowns, but even if your starting position has been sold down to a runner, MicroStrategy has not disappointed.
Jerome Powell and his FOMC pals did not disappoint on Thursday either. The FOMC reduced rates by another 25 basis points, which was widely expected by most of Wall Street. What I didn’t expect was a lack of reaction by the market. The big indexes barely budged after the announcement or during Chairman Powell’s question-and-answer session afterward.
Even though we all expected a 25 basis-point cut, there are enough small nuances around the language, the discussion of the overall economy and the decision of each voter to create a reaction among traders. We often talk about fading that initial move, but Thursday left us nothing to fade regarding a directional call.
With markets in a bullish breakout, I am watching for signs of short-term exhaustion, but animal spirits are running strong, making it tough to find attractive entries and even tougher to consider shorting. It’s a good day to be patient.
At the time of publication, Byrne had no positions in any securities mentioned.