Despite a good fourth-quarter rally, the chart of Paychex (PAYX) looks vulnerable to a pullback.
In this chart of PAYX, above, we can see a death cross (50-day average going below the 200-day) in late July and a golden cross (50-day going above the 200-day). Right now, PAYX has been testing the 50-day average. The On-Balance-Volume (OBV) line improved back up to its February high with the rally this October, but the OBV line has weakened this month. Now look at the lower panel with the momentum study. Prices are going up in October and November, but the momentum (rate of change) of prices is weakening. Chartists call this a bearish divergence -- when prices go up but momentum goes in the other direction.
This longer view of PAYX, above, shows an uptrend punctuated by two corrections. One correction was shallow and the second one was deeper, indicating more aggressive selling (or less aggressive buying) and a more mature market. The OBV line moves up with the price action, but the Moving Average Convergence Divergence oscillator is narrowing toward a "take profits" sell signal.
A pullback to the $50 to $49 area would not surprise us in the next few weeks.