-- PayPal stock is pulling back. It had pushed higher after it unveiled its $2.7 billion acquisition of Paidy. Here's how to trade it now. --
By Bret Kenwell, TheStreet.com
Shares of PayPal (PYPL) started strong on Wednesday, opening more than 1% higher -- and then faded.
The payment processor now is down 1.4% on the day after the stock filled the gap from late July.
The move comes after the company shelled out $2.7 billion for Japan's "buy now, pay later" company, Paidy.
PayPal erupted to all-time highs in February, but like most growth stocks, it suffered a rapid and painful decline.
While most growth stocks bottomed in May as the bear market came to an end, PayPal did not retest its lows. Neither did Square (SQ) for the record, but it came much closer to doing so than PayPal did.
In any regard, PayPal continues to bide its time below $300. Can it rally from here?
Trading PayPal Stock
Daily chart of PayPal stock
Chart courtesy of TrendSpider.com
PayPal reported earnings in late July, which resulted in a gap-down reaction as part of a 10% correction over three days.
The shares broke the post-earnings low a few weeks later, before reversing higher and reclaiming the $270 area.
Since then, the stock has stairstepped its way higher, reclaiming a number of key moving averages along the way.
With Wednesday's initial rally, PayPal filled its earnings gap near $297. With the fade though, the stock is trading back down to the 50-day and 10-day moving averages.
Aggressive bulls can be long right here but will need these moving averages to act as support. If they fail, the 10-week moving average is in play.
Below that and the $277.50 level is on deck, along with the 21-day moving average and 61.8% retracement.
On the upside, bulls need to see a rotation up through Wednesday's high and $297 level. Conservative bulls may consider waiting for this type of rotation before going long.
Above $297 opens the door to $300, then the obvious push to the double-top area near $310. Should PayPal push through $310 and close above this mark, it could open the door to a larger breakout.
So what's the bottom line? Aggressive bulls can be long PayPal stock, but they need to see it hold key support. Should it fail, they can always get out and wait for a better entry.
From TheStreet.com