Automatic Data Processing provides a range of payroll, human resources, benefits administration, time and attendance and tax filing and reporting services to employers. AUD also provides brokerage, auto dealer, and insurance claim services. For the 3 months ended 9/30/00, revenues rose 17% to $1.59B. Net income rose 19% to $173.4M. Results reflect increased revenues from employer services, and higher gain on the sale of investments.

December 3, 2000

Automatic Data Processing (please note the symbol change to ADP from AUD, effective December 1st) is the leading provider of employee services to companies around the world. The company handles payroll, retirement accounts and other critical functions of employee management for their clients. Due to this strong and profitable business, ADP has become a favorite core holding among many institutions. ADP does have a consistent history of announcing 2:1 splits when the stock reaches the mid $70's price level. Technically, the stock is at a critical juncture. On Friday the stock dipped below its 50-DMA just under $65.00. If considering a new position in ADP, it might behoove you to wait to see if the stock firms up early next week. We are getting close to our stop of $64 and will see if ADP can stage a turnaround. Other technical indicators, such as the OBV and the MACD, have confirmed this weakness. If we are stopped, the stock may eventually find support at $61.00. If the support holds, and we avoid the stop, the stock should find resistance at its all time high of $69.94.

December 5, 2000

The share price of ADP slipped just below our stop price, forcing us out of this play. ADP's stock had been exhibiting some outstanding relative strength, but a small correction, which consolidated recent gains, was just a little too enthusiastic. Still, the longer-term technical picture for ADP remains solid, so we may try this play again in the near future.