We turn our attention to the charts today. Technical analysis. Its the artistic side of the analysis. Here, we deal with lines and angles and patterns. Here, we try to listen to the market; to hear its opinion of a stock, quite independent of the seeming facts of the business. Here, we look to paint a picture, as it were. Today’s subject in this exercise is Payment Data Systems, Inc. (PYDS).
Let?s start with a quick evaluation of relative volume measures. Here, we want to examine the degree to which traders, investors, and money managers are more or less interested over the past month in transacting in this security. At this point, this stock has been showing strong relative volume, which indicates interest among those participating in the market for shares of PYDS over the past month. That sets us up to look at relative performance of the stock along with range and volatility measures. This boils down to the concept of what is known as beta?
First off, we can readily state the facts on relative performance. PYDS has moved +0.98 over the past month or so. Over the trailing 100 days, the stock is outperforming the S&P 500 by 98.98. As to the point of beta, we can see the stock has been generally moving less than the rest of the market on a day to day basis. That is according to the 36-month beta score. Another way to look at this is through taking the standard deviation of returns calculated as representing a hypothetical buyer of the stock at a random point at a given average price during the specified period. That gives us a historical volatility score of 217.48%. Finally, in this class of data, we can look at the 20-day ATR as a percentage of the 20-day moving average, which gives us a natural volatility score of 10.63%.
Now, it?s time to look at trend and extent of movement. From a certain point of view, these are the natural opposites in technical analysis. On the one hand, we know experienced traders and technical manuals teach us that the trend is your friend.? However, at the same time, we know it?s wise to fade extreme, overdone movement. That posits a natural tension for analysts, and unfortunately, the best we can do is to look at the facts.
In the first place, the broad impact of money flows should be viewed through the tried-and-tested lens of moving average analysis. In this case, we look at the relative positioning of the 50-day and 200-day simple moving averages. In other words, if the 50-day moving average is trading above the 200-day, it is traditionally seen as a bullish chart trend. Conversely, if the 50-day moving average is trading below the 200-day, it is traditionally labeled a bearish trend or bearing. For PYDS, that adds up to a bullish designation, which suggests that flows have been working in an overall positive direction on the chart.
To counter that notion, we now turn to a look at mean reversion oscillators. Our key indicators of note attempt to score the action as to whether or not a security has pushed too far too fast, leading to a likelihood of some kind of reversion to the mean movement becoming highly probable.
There is a host of oscillating indicators that can offer up such an analytic perspective. We have learned to rely most on RSI and stochastics. Specifically, we look at the 14-day Relative Strength Indicator (RSI) and the 20-day ?fast stochastic?. For both of these measures, if we see a score above 75 (overbought) or below 25 (oversold), history suggests one is wise to expect some reversion to the mean. For PYDS, the 14-day RSI shows a score of 82.24%, while the 20-day fast stochastic shows a score of 42.71%.
We close todays analysis with a quick check of key levels. For our means, we like to quickly check the key Fibonacci retracement zone as well as the primary institutional long-term moving average (the 200-day simple average). In the case of is Payment Data Systems, Inc. (PYDS), the critical 38.2% level drawn off the 52-week high of $2.72 sits at $2.13. PYDS also has additional resistance above at the stock?s 200-day simple moving average, which sits at $ 1.49.
Hopefully, this analysis has offered up some useful perspective. We will catch up with this stock again soon.
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