Saving Your Paycheck to Buy Paychex

• Posted by Greg Harmon
• on January 15th, 2015

When the market is pulling back in an uptrend it makes sense to find stocks that are exhibiting relative strength to the market. These stocks should be your targets for when the pullback ends and reverses. Relative strength can mean that the stock is not falling as much or at all or it is rising. One of those that showed up on my radar this week was Paychex, $PAYX.

A quick look at the chart of the stock price shows that since the beginning of November it has moved sideways in less than a 2 point range. The S&P 500 for comparison is also about flat for that period, but the last week has shown a notable change in relative strength. Where the S&P is down over 1.6%, Paychex is flat. That is what I mean by relative strength.

So it is a strong stock right now, but that is not enough. What then makes it interesting is that it continues to set up for a move higher. After completed an extended AB=CD pattern (to 138.2%) the consolidation allowed the momentum indicators to work off the overbought conditions. Now the MACD is crossed up again and rising while the RSI is moving higher after touching at 40. A move over 47.70 would trigger a trade, and look for a move to 50 on the first step and then 53.50 above that.

Get my book, Trading Options: Using Technical Analysis to Design Winning Options Trades.

 

---

 

Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through December 2014 Expiry and sign up here

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus