Paychex (PAYX) has had a great run from its early 2009 low, but it is not over. After a broad sideways consolidation since October, PAYX is poised to make new highs again.
Take a step back when you look at this daily chart of PAYX, above. Prices moved sideways in a $55 to $46 trading range. In January and February, there was a deep correction, and then in April and May it was a shallow correction. Shallow corrections in an uptrend are a sign of more aggressive buying interest in a stock or index.
The On-Balance-Volume (OBV) line rose in the October to December period, and again since February. Prices are above the flat 50-day moving average line and the rising 200-day line. The Moving Average Convergence Divergence (MACD) oscillator is in a bullish configuration -- rising and above the zero line.
This weekly chart of PAYX, above, is very bullish. Notice how the $45 level has acted as resistance in late 2013, and then as support when it broke above that level. Prices have also stalled out around $55, which gives us a clear breakout point with a close above $56. Prices are above the rising 40-week moving average. The OBV line is positive and the MACD oscillator just crossed for a new buy signal.
Strategy -- go long PAYX on a close above $56; $65 is our initial price target, and use a reasonable sell stop if we are wrong.