I told our members to stay away from this stock. But I’m telling you how to buy it! Check out Paycom Software ($PAYC). (April 03, 2020)
PAYC
I want to look at Paycom Software ( NYSE: PAYC ) and I will tell you why: In my Strategy Session or the Weekend Update for members I said, you don’t want to touch Paycom Software ( NYSE: PAYC ) because they are like the anti Coronavirus. Their business model, they help growing companies manage their employees and all of that kind of stuff, and this isn’t that economy, which is why the stock is doing what it is doing.
I am going to tell you how to buy it on Monday if it does certain things. We will look at a different grid in a second., but first, why am I doing this? It is not day trading to me it is 59-minute trading. The “day trading” strategies are working. Everybody wants to be a day trader; most people lose money because they don’t really know how. They literally wind up buying high from the people who bought low and then reversing it the other way around. So it can be a real hornet’s nest that you are going into if you don’t know what you are doing.
Let’s look and see what we are doing here. This is the type of screen that I use, it is kind of small just because of the resolution of this video; I use a 1-minute, a 5-minute, a 15-minute, and then the daily chart just to keep me honest, I like to know where we are. I have a 6 monitor rig at home, 8 in the office but I don’t spend any time there these days, and so I will have another chart as well but this is sufficient for trading.
The orange line here is the volume-weighted average price. You can see that the stock has been operating below that for quite a while, at least as measured in daily or intraday charts. So what we are going to be looking at on Monday, I would love to see the stock gap down. I would love to see it to 160.00, even lower would be awesome.
And then we look for the reversal and the entry and then we start trading it based on these pivot points. There is a lot more to it, I am just kind of giving you the high points here. There are 3 levels of support, 3 levels for resistance and how the stock ping pongs between those levels tell us whether we want to be long or short.
Here is just kind of a general rule for you: If the stock is below the VWAP you don’t want to be long. If the stock is above the VWAP you don’t want to be short. The exceptions to those rules and they are big exceptions if the stock is WELL below the VWAP that is probably oversold and it is going to rebound so you can play that bank shot.
On the other side of the coin or I should say of the VWAP, if the stock is WAY above the VWAP that’s a bank shot that you can play. It is kind of dicey to short a stock that is going up quite a bit because you are kind of jumping on a rocket ship assuming that it is going to run out of fuel and it might just go into afterburner, so you have got to be careful about that.
The idea is, reversion to the mean, that’s what we are talking about. If the stock is too out of whack, one way or another, it does tend to snap back. So in that respect, we look at extreme moves from the VWAP. But most of the time the idea is that, if a stock is below the volume-weighted average price it means that there are sellers. If the stock is above the volume-weighted average price it means that there are buyers there and they are soaking up the stock. So that is a general rule that you can use.
Free Chart