Automatic Data Processing Inc. (ADP) is looking vulnerable to a further decline. Prices have run into chart resistance around $140 and have broken down below the rising 50-day moving average line in recent days. Chart support does not really materialize until the $120 level and below.
In this daily bar chart of ADP, below, we can see the high in June and the slightly lower high in July. the level of trading volume did not expand from April to June as prices rose and the easier to read On-Balance-Volume (OBV) line has been "topping out" since May. In June the Moving Average Convergence Divergence (MACD) oscillator turned down quickly to a take profits sell signal and now it is close to crossing the zero line for an outright sell signal.
In this weekly bar chart of ADP, below, we can see some warning flags. Prices are still above the rising 40-week moving average line but the weekly OBV line has been stalled the past two months suggesting that buyers are not willing to be aggressive at the current price level. The weekly MACD oscillator has narrowed sharply and is close to a downside crossover and take profits sell signal.
In this Point and Figure chart of ADP, below, we can see a downside price target in the $124 area but that may not be the end of the pullback.
Bottom line: We have a number of technical signals that suggest that prices can retreat to the $125-$120 or lower. Buyers should stand aside and let ADP find new support and fresh accumulation. Another trade from the long side could develop in the months ahead. Traders should be patient or look elsewhere for more immediate opportunities.