Workday Looks Like It'll Pay Off

The HR software company Workday Inc. (WDAY) reported this week an adjusted earnings per share of $1.75, which beat estimates by $0.10. It also posted revenue of $2.08 billion, which beat by $10 million. The company reported 70 million users under contract and a $1 billion share-buyback program.

Shares have jumped higher as WDAY is trading around $260 in the premarket. 

Let's check out the charts and indicators for some guidance.

In this daily bar chart of WDAY, below, I can see that prices made a decline from late February, but formed a small lopsided double-bottom pattern around $210 the past three months.

Prices will be testing the flat 200-day moving average line today and could well finish the week above it. The On-Balance-Volume (OBV) line shows some improvement from late May. The Moving Average Convergence Divergence (MACD) oscillator is now crossing above the zero line for an outright buy signal.

 

In this weekly Japanese candlestick chart of WDAY, below, I see a picture capable of gains. Prices show us bottoming price action around $210. The slope of the 40-week moving average line is flat and that is better than negative. The weekly OBV line has been trying to inch higher the past three months suggesting a subtle move towards more aggressive buying. The MACD oscillator is below the zero-line, but trying to generate a cover shorts buy signal.

In this daily Point and Figure chart of WDAY, below, I can see an upside price target in the $311 area.

 

In this weekly Point and Figure chart of WDAY, below, I can see an upside breakout and a price target in the $307 area.

 

Bottom line strategy: Aggressive traders could go long WDAY on an intraday dip to $250. Risk to $238. The $300 area is my target.

CORRECTION: An earlier version of this story gave the incorrect day for WDAY's earnings report release. 

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