PAYC Chart Chat

http://stockcharts.com/freecharts/gallery.html?payc

Charts don’t matter to this style of investing, but just for fun…

An IBD investor (intermediate growth stock speculator) would believe that PAYC chart shows a nice long flat base forming since about March. That same person might see that the stock has seen nice support on the 200dma, which might indicate technical investors, including institutions, have enough faith to add on at that point. IBD also declared a follow-thru-day (FTD) Friday a week ago, so that person would believe the overall market is moving in her favor at the moment, making speculation less risky than if the market were in a down trend.

So that investor would be looking for a breakout (on volume) above the highs of the pattern. In this case some might buy when it goes through $40.98 and some might wait for it to go through $41.58. Some might say, whichever one breaks through with strong volume is the right time to buy.

The next known catalyst is earnings on Nov 2, but you never know what might cause a breakout before then.

Like this board, IBD/CANSLIM requires strong growth fundamentals to be in place before using charts to aid your buy. Unlike this board, IBD/CANSLIM preaches a strict stop-loss of 6-8% so that you can preserve your principal for better stocks. Saul is willing to get out of a stock when the story changes or when it is just not performing compared to other opportunities. Both are rules that help you make non-emotional decisions. I suspect Saul’s approach will work better for most people.

Happy investing.

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