PayPal (NASDAQ:PYPL) has been ringing the register for shareholders in 2019. And off and on the chart, that looks set to continue in PayPal stock. Let me explain.
Source: Official Leweb Photos Via Flickr
Does the U.S. and China’s trade war and its potential implications on consumers and businesses have you concerned? In Friday’s trading, it certainly had Wall Street’s attention.
The S&P 500 fell by roughly 0.50%, while PayPal stock found itself under even more duress — shedding about 1%. Peer-mobile payments play Square (NYSE:SQ) is off 1.25%. But the potential real losers are companies like Apple (NASDAQ:AAPL) which is down a bit more than 2% or the 4.5% bashing in Deere (NYSE:DE).
Behind the market’s U-turn is the optimism of the past couple days that the world’s two largest economies could find a quick fix quickly faded after Chinese state media deferred expectations for a deal at next month’s G-20 summit meeting in Japan. But don’t think for a second this is what really matters for PayPal stock.
Despite persistent and nagging uncertainties, it’s important to focus on the big picture for PayPal stock and not quick-to-flip, daily-market-based, back-and-forth cheers and jeers. And bottom, top and squiggly price lines — following last month’s supportive quarterly confessional led by the company’s sizzling digital wallet Venmo business and an equally beneficial price chart showing more than just hopeful promise, it’s time to consider going long PayPal stock.
PayPal Stock Weekly Price Chart
It’s been a good year for PayPal stock. Shares are up 32% for 2019 and have captured 20% since breaking out of PYPL stock’s year-long, base-on-base pattern in late January. So, what next? I see more upside potential.
I believe technically shares can match the gains of the prior bullish leg from April 2017’s breakout near $45 to the high of 2018’s year-long congestive base. Some investors refer to this type of continuation action as a mirror move or two-step pattern. And in this instance, should it play out that way, PayPal stock should rally towards $140-$150.
There’s no guarantees of course. And PYPL stock’s weekly stochastics are currently overbought. Still, if price and volume matter most, Thursday’s relative strength breakout on increased volume to fresh highs from a short two plus week flat base does look compelling.
For like-minded investors I’d recommend buying PayPal stock above $115.39. This entry is 1.5% through the pattern high and about .5% north of Thursday’s high of $114.66.
The purchase obviously sacrifices a tiny bit of upside. But if we’re correct about the PYPL’s trajectory, it’s well worth the cost as this strategy looks to avoid buying a false breakout after the broader market’s quick snap back from its trade war panic.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits.
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