Automatic Data Processing (NASDAQ: ADP)

Automatic Data Processing, Inc., together with its subsidiaries, provides business process outsourcing services worldwide. The company operates through two segments, Employer Services and Professional Employer Organization (PEO) Services.

Take a look at the 1-year chart of ADP (NASDAQ: ADP) below with my added notations:

1-year chart of ADP (NASDAQ: ADP)

Over the past week or so, ADP has bee stalling at the $105 level. The stock had also tested that mark as resistance several times since from March until it’s July break higher. A strong close above that $105 level again would most likely lead to another rally for ADP.

The Tale of the Tape: ADP has a key level of resistance at $105. A long trade could be entered on a break through that level. However, if you are bearish on the stock, a short trade could be made on any rallies up to $105.

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!

Good luck!

Christian Tharp, CMT