Someone on Wall St. must have thought the Zune would not sell well. Or that Vista could be delayed again. Short interest in Microsoft rose a breathtaking 43% to 144.3 million shares. That is on top of a 30% increase in October. The trading days needed to cover the position based on the stock's average volume is now 2.5. That is substantial position for a stock with Microsoft's market cap and volume.

Microsoft's stock recently hit $30. It has not been that high since late 2004. With Vista around the corner, there is an impression that Microsoft's core desktop franchise will help. Although early sales of the company's multimedia Zune player have been slow, Microsoft has said that it is in the business to stay and is willing to invest hundreds of millions of dollars on the product.

And Microsoft's statements about its Zune commitment seem true. It chased Sony's Playstation for years, and now there are rumors that the company's Xbox game console is outselling its Sony counterpart.

Investors are still left with enough worries. A run-up of 40% over the last year may be too much for a company with a market cap of over $290 billion. While it is likely that Vista will generate tremendous cash flow and that the Xbox is a formidable competitor in the gaming business, the future of Microsoft's online Live software initiative, MSN, and Xune costs are still in doubt.

And, those worries may be enough to cap the stock's rise and bring in the shorts.

Douglas McIntyre is a partner at 24/7 Wall St.