Funny Accounting Can’t Save Microsoft $MSFT

Yesterday, in an attempt to keep their stock price up, Microsoft (MSFT) announced a dividend hike and another stock buyback. When a company buys their stock back, it reduces the amount of outstanding shares. This in turn ups their earnings-per-share even if they don’t make a penny more. It is often referred to as funny accounting or fuzzy math.

After announcing this, shares of Microsoft surged in after-hours trading and into the morning session. However, the stock rose only high enough to hit a double top (on the daily stock chart) before collapsing back down. With the fall back to earth, a topping tail was born. Topping tails are major top signals. While Microsoft was looking to pull one over on average investors, it appears smart money is selling right into the pop. I expect Microsoft to break lower in the coming days. Once the stock price breaks below key support at $137, an epic move to $124 will likely take place within days.

Nick Santiago

InTheMoneyStocks