In a recent Real Money column Jim Cramer talked about earnings that were better than expected (BTE), better than feared (BTF) and uglier than feared (UTF). Earnings from PayPal Holdings Inc. (PYPL) disappointed this quarter, so let's take a look at the charts and indicators to see what camp the stock falls into.
In the daily bar chart of PYPL, below, we can see some signs of weakness.
Prices are testing the rising 50-day moving average line after yesterday's gap to the downside. The 200-day average line is rising and well below the price action.
The daily On-Balance-Volume (OBV) line has been only moving slightly higher the past three months even though prices have moved higher -- a bearish divergence.
In the bottom panel of the chart is the 12-day price momentum study, which shows a lower high from June to July while prices make a higher high -- another bearish divergence.
In the weekly bar chart of PYPL, below, we can see that prices have tripled the past three years. PYPL is above the rising 40-week moving average line.
The weekly OBV line did make a new high for the move up but it has lagged the price action. The weekly MACD oscillator is poised to cross to the downside for a take profits sell signal.
In this Point and Figure chart of PYPL, below, we can see an upside price target of $148 being projected. A decline to $111.98 is needed to weaken this picture.
Bottom-line strategy: PYPL did not make a large top formation but we can point to some bearish divergences. Things could change, but right now I would only anticipate a modest amount of price weakness.
