USA Today ran a story recently highlighting 10 S&P stocks with the biggest percentage gains since the last market high. This kind of story is backward looking. "Hey, you would be ahead xx% if you bought these names a year ago." Thanks. Let's look at the charts and indicators of these top-10 picks and see what the future might bring.
Global Payments (GPN) is the eighth name on USA Today's list. (Click here for Part 7 of this series, on TECO Energy.)
Can Global Payments outperformance continue? Let's go to video tape as one sportscaster was fond of saying.
In this daily chart of GPN, above, we can see a pattern similar to many other stocks we have looked at this year. There is a selloff into a February low and then a subsequent recovery. Prices are now back above the rising 50-day and 200-day average lines. Prices have broken out over their 2015 peaks and then made a shallow correction in April and May.
All this sounds good and if we stopped there it would be OK, but volume and the On-Balance-Volume (OBV) line has me scratching my head. Even though prices made new highs the OBV line has diverged. First, in April, as prices pushed up to new highs the OBV line only equaled its October-November 2015 peaks. The OBV line plunged sharply lower in April and has not recovered. Prices, meanwhile, only made a shallow dip before moving up again this month. I don't know if this is telling us something very important about the durability of the rally or it was a quirk of the math behind the OBV indicator.
When we look at this weekly chart of GPN, above, our concerns about volume largely go away. Here prices are above the rising 40-week moving average line. The glitches with the OBV line on a daily chart pretty much disappear on this weekly chart, which is neutral.
The Moving Average Convergence Divergence (MACD) oscillator is bullish. Keeping our attention on this weekly chart, I would look for GPN to rally to the mid-$80s. A close below $70 would be a bearish signal.