Second chance on Paycom (PAYC)? (September 16, 2015)
Paycom ( NYSE:PAYC ). The reason I’m mentioning this is because yesterday the stock broke out. But then after hours the company reported that it’s selling about, I think close to like half a million shares, a secondary offering. It’s not really a secondary offering, the company doesn’t get any money, it’s just insiders that are selling and they’re selling to some private investors, but they have to report that kind of thing.
So the stocks knocked down today. My suggestion last night was I think it’s giving you an entry, because you see the kind of move that this had yesterday. That’s a pretty big move. That’s a pretty convincing breakout on volume, so I like that. So then the stock moves down, “Oh, secondary offering! I’ve got to sell.” And then as it turns out it’s not the company diluting it’s shares, just a bunch of people selling. I don’t know if they were planned sales before or not. I don’t know. I don’t care. But I just saw the stock falling and resting around 38.00, 39.00, something like that.
My suggestion was that it was an opportunity to buy a breakout that probably otherwise wouldn’t have pulled back. So you look at this kind of volume here, this was a big washout and the stock is back in the cluster here, like right in the middle. There’s really not a whole lot of difference between this here and any of this stuff except that this follows a breakout. We saw a similar thing back here but this really wasn’t a squeeze, was it? So my point is if you’re buying this stock, if you’re owning this stock be patient with it, just know that this was a really bullish sign. And the fact that the stock reversed today isn’t, to me, particularly a negative, because that’s actually kind of what I expected it to do. It would be a negative if the stock kept falling, but we have to wait for future days for that.
So my idea on this one is, first of all if you’re looking for something to do wait until after 2:00 tomorrow because the market is just going to be super volatile. And if you’re looking at any particular stocks that you want to get know what prices you’d like to buy them at. For example we’ve looking here, lets say after the Fed reports earnings stocks get really volatile. Well, maybe it would be nice if you could buy this thing right at the 50-day moving average. We can use any stock; just pick a point where you’d say, “Wow! If the stock ever got down to there I’d definitely want to buy.” Well, it could be gyrating enough tomorrow after the Fed announces what it’s going to do, it could be gyrating enough to where you’re get a great fill. So just keep that in mind.
But anyway, back to Paycom ( NYSE:PAYC ). This is still in consolidation within a volatility squeeze but I think this was meaningful. I think you can hold this stock and wait for the squeeze to continue. One caveat though, if the stock starts trading below the 50-day moving average then I think you definitely want to get out.
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