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Here’s what really gets me excited about this setup: ADP is down on the year while the S&P is up double digits. That’s textbook relative weakness.

Relative weakness means exactly what it sounds like – the stock is weak compared to the broader market. While most stocks are making money for investors, ADP is losing money. That’s institutions quietly rotating out of a name they don’t want to own.

When markets get volatile, the relatively weak stocks get hit first and hardest. ADP’s been swimming naked for months. Now the tide’s going out.

Bearish Stacked EMAs Create Resistance

The technical damage in ADP runs deep. The exponential moving averages are stacked bearish, meaning the shorter-term trend lines sit below the longer-term ones, all pointing downward.

Picture a stack of pancakes tilted downward.

The 20-day EMA sits below the 50-day, which sits below the 100-day, which sits below the 200-day. Every timeframe shows a downtrend.

This creates a wall of resistance above current prices.

Even if ADP bounces, those moving averages will cap any rally. The stock can’t even reclaim its trend lines. Once you get this kind of technical damage, it takes months to repair – not weeks.

Why the Setup Makes Sense

ADP’s core business is processing payrolls.

September’s private payroll report showed 32,000 jobs lost versus 51,000 expected gains. When companies aren’t hiring, they don’t need ADP’s services.

The government shutdown hitting day 10 doesn’t help either. ADP serves government contractors who aren’t getting paid. Small businesses – ADP’s bread and butter – will delay HR tech spending when trade wars heat up.

But honestly?

I don’t need the fundamental story.

The chart’s been screaming weakness for months. Those death crosses in July, the failed bounces, the inability to break resistance – this breakdown’s been building.

Your Action Plan

With those stacked EMAs acting as resistance and four squeezes pointing down, any rally should be short-lived.

This sets up for a potential play using put options.

The risk is obvious – Trump could make peace with China tomorrow, jobs data could surprise higher, and market sentiment could flip overnight.

That’s why position sizing matters.

But when technical weakness, fundamental headwinds, and shifting market sentiment align like this? These setups can move fast.

The stars are lining up for ADP to break lower. Sometimes the best opportunities hide behind the biggest headlines.

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