As the major indexes keep chopping around near all-time highs…
Traders are getting scared.
This setup is related to tech, but not in the way you think.
At face value, the stock is the complete opposite of the AI boom…
For anyone worried about:
- The labor market
- Over-inflated tech stocks
- The economy in general
Focus on this stock.
And pay attention to the surprisingly optimistic catalyst behind it.
Big Tech Jitters
The market can’t make up its mind.
For weeks now, major indexes have traded sideways in a channel near record highs. Buyers won’t commit to the next leg up. Sellers won’t give up their first-half gains.
It’s a standoff.
Look at the SPDR S&P 500 ETF Trust (NYSE: SPY), it’s in a tight band between $720 and $760.
That’s a market holding its breath.
And the nervousness is loudest in tech. After semiconductors ran more than 80% in the first half of the year, the smart money started ringing the register. Cash is rotating OUT of the crowded chip trade and into the names that got left behind.
We saw it again this week. Samsung Electronics posted a jump in quarterly profit north of 1,800%, and the stock still dropped almost 7%.
When a company prints numbers like that and it sells off anyway, there’s something larger at work. An 1,800% profit was already baked into the price.
When ten companies make up more than 40% of the S&P 500, and expectations climb higher than any earnings report can satisfy, the danger isn’t that tech is broken. The danger is that everyone already owns it.
I don’t want to be standing in that crowd when the momentum finally capitulates.
So I go hunting somewhere else.
The Job Market Won’t Roll Over
Everyone’s terrified that AI is about to torch the labor market. Robots take the jobs, workers hit the street, and the economy caves in.
That’s the story fear is selling. But the data tells us something different.
Yes, June hiring cooled. The economy added just 57,000 jobs, short of the 110,000 the Street expected, and the two prior months got revised lower.
But look under the hood. Unemployment ticked down to 4.2%, a twelve-month low. Layoffs are scarce, with weekly jobless claims still running near 215,000.
Companies aren’t firing. And this spring, payrolls beat expectations three months in a row before June cooled off.
And here’s the part nobody’s talking about…
A new study tracked AI spending and employment across roughly 22,000 U.S. companies. The firms pouring the most money into AI didn’t shrink their payrolls. They grew them.
Headcount at the heaviest AI spenders climbed more than 10% over two years. Entry-level hiring jumped 12%.
Those gains showed up six to twelve months AFTER the AI investment, and mostly at big, fast-growing, tech-heavy firms. So it’s not undeniable proof that AI mints jobs everywhere. But it flips the doomsday script on its head.
The companies building the future are hiring into it, not gutting their workforce to pay for it.
That backdrop is exactly where my favorite trade comes in…
My #1 Stock: Paychex
If the job market is steady and businesses keep paying workers, who touches every one of those paychecks?
Paychex, Inc. (NASDAQ: PAYX).
Paychex runs payroll, HR, and benefits for small and medium-sized businesses.
Boring? Sure. But it pays one out of every eleven private-sector workers in this country, across nearly 800,000 customers. Every check those businesses cut, it goes through Paychex.
The stock got crushed over the past year, down about 26%. It’s a classic beaten-down name. Exactly the kind of stock the smart money rotates INTO when it’s finished chasing chips.
Look at the right side of the chart. After months of bleeding, PAYX reclaimed the $100 level and started stair-stepping higher.
That’s momentum returning to a stock everyone had written off.
The company just closed a fiscal year with revenue up 17%, and it even rolled out its own AI engine to help businesses manage their workforce.
While the crowd fights over flashy AI chip stocks, this steady payroll company is quietly riding the SAME wave from the other side.
Here’s my trade:
- Symbol: PAYX
- Contract: August 21 $110 Calls
- Target: $125
One caveat… institutional flows drive my multi-week setups, and summer volume is thin.
The big money is still on vacation. Until the fall surge shows up, I’m keeping my size small on this one. Small enough that a slow week doesn’t rattle me.
Position for the move, respect the season, and let the economy’s rotation do the work.
The headlines want you to be scared.
Fine. Let the crowd stew in it.
While they panic over the AI names everyone already owns, I’m buying contracts on a boring payroll company breaking out on the back of a labor market that refuses to quit.
It’s the same basic strategy I used to turn $5,000 into $493,000…
Stay small until the volume returns in the fall. And keep your eyes on stocks that have been left for dead. That’s where the next move is hiding.
Stay Street Smart,
Jeff Zananiri
*Past performance does not indicate future results, Not typical.
