Good Setup in ADP

Published on Friday, 23 July 2010 18:16 Written by TradersHuddle Staff

New York, July 23rd (TradersHuddle.com) - Shares of Automatic Data Processing, Inc. (NYSE:ADP) closed the trading session at $41.89 near its 50 day and 200 day moving averages currently set at $41.08 and $42.24 respectively. ADP's price action is above the 50 day moving average but below its 200 day moving average, which provide a nice trading setup, with clear reference points.

Automatic Data Processing, Inc. (NYSE:ADP) is a global provider of business outsourcing solutions. The Company's services include a wide range of human resource, payroll, tax and benefits administration solutions. Automatic Data also provides solutions to auto, truck, motorcycle, marine and recreational vehicle dealers. Its solutions enable employers to staff, manage, pay, and retain their employees in the United States, Canada, Europe, South America, Australia, and Asia. The Professional Employer Organization Services segment provides employment administration outsourcing solutions, including payroll, payroll tax filing, HR guidance, and 401(k) plan administration for employees primarily in the United States.

ADP price action seems to be setting up for a tight range between the 50 day moving average as support and the 200 day moving average serving as resistance.

A tiered approach to enter the stock, appears to be the best way to maximize possible movements from the stock, as traders could enter ADP with a small position and wait for the stock to break out above the 200 day moving average at $42.24, where traders could add to their position as momentum builds with the breakout. The flip side will be if support being referenced at the 50 day moving average set at $41.08 breaks it could mean further downside in the horizon for ADP.