What's the best way to make money in the stock market? Find out what millennials want and give it to them, Jim Cramer tell Real Money readers in "The Stocks That Attract the Buy Now, Pay Later Younger Investor." Services like "buy now, pay later" are red-hot with millennials, and that's why Square's (SQ) acquisition of an Australian payments rival was so well received.
Square said that "buy now, pay later" represents a huge opportunity for the company, as deferred payments still only account for 2% of total online sales. While the shares initially dipped on the news, they closed up a stunning 10.1% by the close.
Cramer called this acquisition "brilliant," noting the analysts love the deal as well.
Let's check out the charts of SQ.
In our June 30 review of SQ we wrote that, "Traders could approach SQ from the long side on a shallow two day dip. Risk to $219. The $285 area is our first price target followed by longer-term gains to the $323 area."
In the daily bar chart of SQ, below, we can see that the shares have rallied to retest the highs of February and April. Our $285 price target is not far away. SQ is trading above the rising 50-day moving average line as well as the rising 200-day line which was tested in May and June.
The On-Balance-Volume (OBV) has been steady since April and could be turning upwards now. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line.
In the weekly Japanese candlestick chart of SQ, below, we can see that traders have been rejecting the prices above $270 with upper shadows and top reversal patterns since February. The slope of the 40-week moving average line is positive.
The weekly OBV line shows a slight improvement from May. The MACD oscillator has crossed to the upside for a fresh buy signal.
In this daily Point and Figure chart of SQ, below, we can see that the software is projecting the $346 area as a potential price target.
In this weekly Point and Figure chart of SQ, below, we can see the $337 area as a price target, which is below the daily target.
Bottom-line strategy: The price of SQ is pointed up but spillover weakness from the broader market could stop the stock in its tracks for the third time (February and April were the earlier times). Longs should raise stop protection to $240 from $219.