Don't Ignore This Chart!

Are Shareholders Withdrawing From PayPal?

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The past two weeks have not been kind to PayPal (PYPL) as the online payment enabler has dropped roughly 10% since reporting stellar quarterly results and witnessing a breakout to its post-IPO all-time high.  PYPL beat estimates on both revenue (slightly) and EPS (.29 vs .27) and the company was rewarded with a strong gap higher in late October.  Check out the initial reaction.....and then the selling:

Personally, I don't like the loss of price support, but thus far gap support (horizontal green line near 40) and the rising trendline (just above 39) has held.  For those interested in PYPL on the long side, the 39-40 area represents solid reward to risk entry, but given overall market weakness and breakdowns of late, I'd consider keeping a tight closing stop in the 38.75-39.00 area.  A recovery from this level could lead to a test of post-earnings price resistance near 44.

Happy trading!

Tom

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Tom Bowley
About the author: co-founded Invested Central in 2004 and served as the site's Chief Market Strategist for more than 10 years. Invested Central provides stock market education and guidance for those interested in making their own financial decisions. During his tenure at Invested Central, Tom co-hosted Market Open LIVE, a national radio broadcast that covered many of the largest markets across the U.S. In addition, he has spoken at various conferences throughout the United States and Canada and has taught thousands of traders across the globe how to trade equities more wisely with an emphasis on managing risk and intermarket relationships. Learn More
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