Fun Fact #44
When a company buys back its own shares (share buyback), the common misconception is that the EPS will increase. The EPS is Earnings “Per Share,” or Earnings/Shares, so if the company bought back shares, lowering the denominator, wouldn’t the EPS go up?
Unfortunately, the denominator of EPS is actually the “weighted average number of shares,” meaning the number of shares is averaged over a year. Thus, buying back shares will not impact the EPS ratio.
I think that if QQQ doesn’t close green tomorrow, we will probably see a retest of 162 by the end of this week or early next week. Notice how the downtrend line from the March highs intercept with the 162 support level. That makes the this level even more important. If QQQ did drop to 162, that’s a drop of another 4 points. Since 4 points is only 2.5%, this drop could happen in one day.
The reason why I’m bearish all of a sudden is because I think Apple will see a pullback due to aggressive profit takers. Also as a side note, I just sold my Apple position today.
See you tomorrow!