Investors may want to avoid PayPal Holdings (PYPL) and Square (SQ) at the moment.
For one, both are technically stretched.
Square for example is plunging from its upper Bollinger Band (2,20), and from severely overbought RSI, MACD, and Williams’ %R. From a current price of $214, it could fall to test support at its 50-day moving average around $197.24.
PayPal is also stretched at its upper Bollinger Band, with RSI, MACD, and Williams’ %R just beginning to pivot lower. From a current price of $231.03, it could potentially test support around $208.25.
At the same time, both are under pressure from Google’s Pay App, as pointed out by Piper Sandler analyst Christopher Donat. He also noted Square’s Cash App downloads cooled off 12% year over year in December.
However, don’t count PYPL and SQ out just yet.
With stimulus payments on the way, and a potential digital currency future, both stocks could see higher highs. Once the pullback in both is exhausted, look to buy.