Eyeing ADP As An Attractive Short

Published 12/29/2017, 12:10 AM
Updated 07/09/2023, 06:31 AM

Shares of Automatic Data Processing Inc (NASDAQ:ADP) have an attractive risk/reward short setup on the daily chart. On July 31st, 2017, Automatic Data Processing made a 52 week high at $121.77. It then collapsed within a month to under $103.00. Since that epic drop, the stock has slowly inched back higher, but has NEVER taken out the 52 week high of $121.77. This means we have a defined stop at any break of $121.77 (closing basis).

Next, the chart pattern is a bearish triangle, thus favoring the downside. With risk of less than 5% and a reward of potentially that $103 level (+15%), this is VERY attractive coming into 2018. Also, it is worth noting that the P/E ratio is 30, definitely stretched on a valuation basis.

ADP Daily Chart

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