• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

Paychex Presents a Risk/Reward Dilemma for Chart Readers

Let's review the charts and indicators.
By BRUCE KAMICH
Apr 08, 2021 | 09:47 AM EDT
Stocks quotes in this article: PAYX

For his final "Executive Decision" segment of Wednesday's Mad Money program, Jim Cramer checked in Marty Mucci, president and CEO of Paychex (PAYX) , the payroll processor.

Mucci said Paychex has updated all of the company's guidance and now expects revenues to be flat for the year.

Beyond payroll, Mucci said that Paychex HR outsourcing services have grown by double digits and businesses are relying on them more and more for things like help with PPP loans and other government assistance.

Paychex also has a new partnership with Clover, a small business point-of-sale system. Mucci explained that now businesses that use Clover can log their time and attendance right into their point of sale and that data flows right to Paychex.

We looked at the charts of PAYX back on January 5 and wrote that "PAYX has turned lower and could decline to the $80 area for starters. The longer-term trend is positive so this anticipated decline could become a buying opportunity. Keep your powder dry for now."

In this updated daily bar chart of PAYX, below, we can see that prices worked lower from January 5 but only reached the $85 area and not $80. Prices subsequently rallied to a slight new high by late March but a downside price gap the other day injects a note of caution. Prices gapped down to test the rising 50-day moving average line. The 200-day moving average line is rising and intersects down around $85 now - the late January low.

The On-Balance-Volume (OBV) line peaked before the middle of March and its weakness tells me that sellers of PAYX have been more aggressive recently. The Moving Average Convergence Divergence (MACD) oscillator made a lower high recently than it did back in November for a bearish divergence and the oscillator has just crossed to the downside.

In this weekly Japanese candlestick chart of PAYX, below, we see a chart that is on the verge of turning lower. The last three candles look like a top reversal pattern. This could result in a sideways trend or a downtrend. The slope of the 40-week moving average line is still positive.

The weekly OBV line is lagging the price action but shows a peak in the middle of March. The MACD oscillator is very close to another downside crossover and take profit sell signal.

In this daily Point and Figure chart of PAYX, below, we can see that the software is projecting a potential downside price target in the $87 area.

In this weekly Point and Figure chart of PAYX, below, we can see a projected upside price target of around $104.

Bottom line strategy: I do not find the risk and reward parameters for PAYX to be enticing. The recent downside price gap and the Point and Figure target of $87 do not thrill me. Neither does the weekly Point and Figure target of only $104. The company's guidance is also not inspiring.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are prohibited from trading individual securities.

TAGS: Investing | Stocks | Technical Analysis | Trading | Financial Services | Software & Services | Mad Money | Executive Interview

More from Investing

Paychex's Charts Indicate It May Not Pay to Hold Its Shares Right Now

Bruce Kamich
Jun 29, 2022 8:36 AM EDT

The technical indicators of the provider of human resources and payroll services are not favorable at present.

Down Market, Negative Growth, Recession Talk, AMD, Trading AeroVironment

Stephen Guilfoyle
Jun 29, 2022 7:53 AM EDT

All of the talk around recession that had abated, at least for a day, returned with a vengeance, supported by a Cathie Wood interview.

A Market for Sitting on the Sidelines

James "Rev Shark" DePorre
Jun 29, 2022 7:52 AM EDT

There may be some short-term trades and perhaps a few buying opportunities of unfairly hit stocks, but it just isn't the time to be active.

Griffon Corp.: Under-loved, Under-followed, Ready to Rumble

Paul Price
Jun 29, 2022 7:00 AM EDT

The maker of building products appears significantly undervalued based on its results and earnings prospects; here's how to play it.

Naspers to Unlock Its Own Value By Selling Down $129B Tencent Stake

Alex Frew McMillan
Jun 29, 2022 6:32 AM EDT

Naspers and its investment-holding company Prosus will sell down their Tencent stake and buy their own shares, with both companies trading at big discounts to NAV.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:56 AM EDT STEPHEN GUILFOYLE

    Stocks Under $10

    Check out what's going on in the Stocks Under $10 ...
  • 12:04 AM EDT PAUL PRICE

    Two Good Signs -- Especially for Small-Cap Investors

  • 12:10 AM EDT PAUL PRICE

    More Insider Buying in American Woodmark (AMWD)

    American Woodmark , which I've discussed here fr...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login