For the "Executive Decision" segment of his "Mad Money" program last Friday, Jim Cramer sat down with Carlos Rodriguez, president and CEO of Automatic Data Processing Inc. (ADP) , our nation's largest payroll processor.
Rodriguez said despite seeing a lot of fear and uncertainty in December, ADP continues to see steady growth in both employment and wages. The economy still has a lot of momentum, he said, even with the recent government shutdown.
Rodriguez was most excited about ADP's human capital management offerings. The company can provide complete human resource outsourcing as well as handle benefits, retirement plans and compliance issues. For smaller companies competing for talent, these services are crucial.
Cramer said the best way to play our growing economy continues to be with ADP. OK, that sounds like a strong fundamental story, but what about the charts? Let's check.
In this daily bar chart of ADP, below, we can see that prices corrected to the downside in the fourth quarter of 2018. From a late December nadir the share price of ADP has firmed back above the declining 50-day moving average line and above the rising 200-day line. The 50-day line recently closed below the the 200-day line for a very belated bearish death cross. The level of volume has been higher from November, suggesting that sellers and buyers have been more active. The daily On-Balance-Volume (OBV) line declined in November and December but has been firming this year, telling us that buyers are acting more aggressively again. The Moving Average Convergence Divergence (MACD) oscillator has just crossed the zero line for an outright go-long signal.
In this weekly bar chart of ADP, below, we see a bullish alignment of the indicators. Prices are back above the rising 40-week moving average, which did a great job the past three years in identifying the uptrend. The weekly OBV line shows a bullish trend the past three years and it is back to its 2018 high. The weekly MACD oscillator has narrowed and is close to a bullish crossover and buy signal.
In this Point and Figure chart of ADP, below, we can see a bullish upside price target of $170 projected.
Bottom line strategy: ADP is pushing up into overhead resistance from late last year. Prices could stall a bit in the near term, but the charts favor a move to new highs. Approach ADP from the long side around $140, risking below $133. My upside price targets are $150 and $170.
