If yesterday’s market selloff turns out to be a one day worry, the recovery could push some good stocks out of bullish patterns.
Yesterday we looked at WDAY which held up nicely in the market’s weakness.
Today I’ve got another bullish pattern that’s ready to breakout and run.
When the market made a new low in last December Paycom Software (PAYC) didn’t follow suit. It held above its November low.
This divergence was the first sign that PAYC would likely rally nicely if the market bounced.
Not only has it rallied, it’s now about to breakout of a 3-month base sitting on the 200-day moving average.
If it breaks out over $137 it should run, especially if the market has an upward bias on the breakout day. $138 has also been a pivotal area so the best breakout will be to clear $138.
Once it clears $137, I’d set a quick stop under $135, or if you want to be more conservative, the better stop would be under $133.
If it breaks out without you, and you’d like to enter, I would look for opportunities to enter for less than $139 on a pullback and use the same stops.
The market is in a bullish mode right now, but it we get another wave of selling I’d prefer to keep stops tight.
Rick Nartarian, Chief Investment Officer
The American Investor Daily