Microsoft Corp (MSFT) shares rallied 1.67% to $57.76 after the company announced a dividend increase and share repurchase program. The board of directors declared a quarterly dividend of $0.39 per share, reflecting an 8% increase over the previous quarter’s dividend. The dividend is payable December 8, 2016 to shareholders of record on November 17, 2016. The ex-dividend date will be November 15, 2016. The company also approved a new share repurchase program authorizing up to $40 billion in share repurchases. The new share repurchase program, which has no expiration date, may be terminated at any time. The company reaffirmed that it is on track to complete its current $40 billion stock repurchase program by December 31, 2016.
Price action on the MSFT daily chart shows that the earlier in the week, price respected the 50-day SMA. The current bullish rally is tentatively facing resistance from a potential bearish Gartley pattern that targets a reversal at the $58.00 level. If valid, we could see a potential reversal target the $56.50 level.
If we continue to bullishness and the bearish pattern is invalidated price could target the psychological $60.00 handle. Medium-term upside targets include the $60.73 to $62.50 range.
The Trade: Buy MSFT at $58.50, with a stop loss at $58.00 and a take profit at $60.50. The Risk/Reward Ratio is 1:4