“ADP’s relative strength in 2025 puts it in a prime position to lead the next leg higher as market sentiment improves.”

5 months ago 25

In a market weighed down by weak consumer confidence and broad declines, Automatic Data Processing (ADP) is standing tall.

While major indices like the Nasdaq falter and momentum stocks lose steam, ADP has been quietly outperforming.

Up 7.1% year-to-date and trading near its 52-week high of $314.06, this stock is defying the broader market weakness, showing exceptional resilience and strength.

With strong technicals, multiple time-frame squeezes, and fundamental momentum driven by stellar earnings, ADP is setting up for its next big move.

Here’s why ADP is one of the most compelling setups I’m seeing right now.

Resilience in a Weak Market

ADP has proven to be a defensive powerhouse. Its business model, which thrives on providing payroll and HR solutions to a wide range of industries, offers stability and growth even during times of economic uncertainty.

While cyclical sectors like tech and retail are faltering, investors are flocking to high-quality names with strong earnings and defensive characteristics. ADP’s relative strength in 2025 puts it in a prime position to lead the next leg higher as market sentiment improves.

Stacked EMAs: A Hallmark of Strong Trends

ADP’s stacked EMAs (Exponential Moving Averages) on both the daily and weekly charts confirm the strength of its uptrend.

The alignment of shorter-term EMAs (e.g., 8-day, 21-day) above longer-term EMAs (e.g., 50-day) signals that buyers are dominating the trend and the stock is rising in a healthy, sustainable manner.

This technical setup is one of the most reliable indicators of trend strength and gives traders confidence that pullbacks to key levels—such as the 8-day EMA—are buying opportunities.

Multiple Squeezes Building Energy

One of the most exciting aspects of ADP’s setup is the presence of squeezes across multiple timeframes. From the 5-minute to the 130-minute, these squeezes indicate periods of price compression where volatility is low, and energy is building for a significant move.

Think of these squeezes as a coiled spring—when the stock breaks out of consolidation, the move is often explosive. With squeezes aligning across so many timeframes, ADP could be gearing up for a powerful breakout in the near term.

Earnings Momentum Driving the Trend

ADP isn’t just riding technical momentum; it’s backed by impressive fundamentals. The company’s fiscal Q2 2025 earnings beat expectations, with standout highlights that reaffirm its growth potential:

Revenue: $5.05B, exceeding the $4.96B consensus and up from $4.67B a year ago
Adjusted EPS: $2.35, beating the $2.30 estimate and rising from $2.13 last year
Employer Services Revenue: Up 8% year-over-year, with segment earnings climbing 11%
Adjusted EBIT Margin Expansion: Improved to 25.2% from 24.6%

ADP also raised its FY2025 guidance, reflecting confidence in its ability to deliver 6%-7% revenue growth and 7%-9% adjusted EPS growth, alongside margin expansion.

This combination of consistent earnings beats, strong guidance, and business momentum provides a solid foundation for ADP’s continued strength, even in a challenging macroeconomic environment.

Your Action Plan

ADP checks all the boxes for a high-conviction trade:

Technical Strength: Stacked EMAs and multiple timeframe squeezes signal strong, sustainable momentum.
Fundamental Backing: Earnings beats, raised guidance, and margin expansion provide the fuel for continued growth.
Relative Strength: Outperforming the market in a weak environment attracts institutional investors and signals long-term demand.
Market Positioning: A defensive business model ensures stability while offering upside potential during periods of economic recovery.

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