PayPal shares made a strong break below support during the stock market selloff earlier in the week but is now pulling back to retest that area. If it holds as resistance, share prices might fall back to the recent lows around $30/share.
Stochastic is on the move up, suggesting that there’s still enough buying pressure left to push for more gains. Similarly, RSI is climbing and indicating that buyers are in control of price action at the moment. On the other hand, the 100 SMA just crossed below the 200 SMA, indicating that the path of least resistance is to the downside.
PayPal Shares Outlook
News that the company is expanding its ‘One Touch’ payments feature to 13 global markets as the mobile payments industry continues to expand has allowed PayPal shares to bounce in the past couple of days. If the momentum is strong enough, it could push the stock back above $35/share or even until the ceiling at around $40/share.
Recall that PayPal’s split with Ebay was welcomed positively by investors, as this would allow the company and its managers to focus more on its payments offerings. According to Money Flow Index, the company enjoyed a large inflow of cash recently, as the shares received $114.51 million in upticks and gave away $91.21 million in downticks.
In addition, PayPal shares also benefitted from the overall boost in US equities, spurred by the upbeat US preliminary GDP reading for Q2 2015. Recall that the initial estimate showed a 2.3% expansion and analysts expected to see an upgrade to 3.2%. The US dollar and stocks surged upon seeing the upgrade to 3.7% growth for the period, indicating that the economy is doing well despite global economic headwinds.
Although underlying data suggests that the strong momentum might not be sustained in the current quarter, investors are feeling more confident about taking on more risk by buying equities such as PayPal shares since the US could rely on a few more months of low interest rates.
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