Paycom Software, Inc. offers cloud-based human capital management (HCM) software solutions delivered as Software-as-a-Service in the United States. It provides functionality and data analytics that businesses need to manage the complete employment life cycle from recruitment to retirement. Its HCM solution offers a suite of applications in the areas of talent acquisition including applicant tracking, candidate tracker, background checks, on-boarding, E-Verify, and tax credit service applications; time and labor management, such as time and attendance, scheduling/schedule exchange, time-off requests, labor allocation, and labor management reports/push reporting, payroll and tax management, Paycom Pay, expense management, and garnishment management applications.
Take a look at the 1-year chart of Paycom (NYSE: PAYC) with the added notations:
PAYC had been in a steady trend higher for most of the past year, but the stock started a significant decline in November. The stock has now fallen all the way back down to its $30 level. Over the past year, PAYC has found support at that same $30 support (green) on multiple occasions. Traders may be able to expect some sort of bounce if the stock reaches that support again. However, if the $30 support were to break, lower prices should follow.
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The Tale of the Tape: PAYC has an important level of support at $30. A trader could enter a long position at $30 with a stop placed under the level. If the stock were to break below the support a short position could be entered instead.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach