Square

Shares of Square (SQ - Get Report)  are struggling to follow in the footsteps of Roku (ROKU - Get Report) and Etsy (ETSY - Get Report) when it comes to a post-earnings rally. It may not have notched big double-digit returns, but the move was still impressive. After opening lower to start the session, Square stock closed higher by 2.42% at $81.24.

The company beat on fourth-quarter earnings and revenue expectations, but first-quarter guidance was somewhat disappointing. Bears are wondering if they can finally crack Square while bulls are looking to see if they can reverse the stock's losses.

Can they?

Trading Square Stock

One-year daily chart of Square stock
One-year daily chart of Square stock

The bulls are doing a good job so far, rallying SQ well off the lows. The stock is jumping off the 21-day moving average and has kept Square's uptrend alive and well. So long as Square is able to stay over Thursday's lows as well as the 21-day moving average, then bulls can stay long SQ stock.

Below these levels and the 200-day moving average is likely on the table. Now I want to see how Square stock handles this $78 to $80 level, an area that has been a lid on the stock over the past five weeks. Should it give way and if Square stock turns positive on the day, it could fuel a buying frenzy among bulls.

Let's see which level gives way first -- resistance or support -- and see what type of follow-through we get from there.

Non-GAAP earnings of 14 cents per share beat estimates by a penny, while revenue of $464.25 million soared 64.2% year-over-year and beat analysts' expectations by more than $10 million.

First-quarter earnings guidance of 6 cents per share to 8 cents per share came up short of the 12 cents per share analysts were looking for. Management's revenue outlook was better, though, calling for $472 million to $482 million in sales, with the midpoint coming in ahead of consensus expectations of $484 million. Perhaps that's why investors feel more comfortable bidding the stock up off the lows.

For its part, PayPal (PYPL - Get Report) stock is also moving higher. While shares are up just slightly on the day, they are hitting new 52-week and all-time highs. The name continues to be a big-time winner as digital and online payments continues to grow. Seeing the strong revenue outlook from Square is likely encouraging the bulls as well.

PayPal is a holding in Jim Cramer's Action Alerts PLUS member club . Want to be alerted before Jim Cramer buys or sells PYPL? Learn more now.

"We love the digital payments space. It's a secular growth market that that shows no signs of letting up. When it comes to which name to be in, while Square, PayPal MasterCard ( MA - Get Report) and Visa ( V - Get Report) are likely all long-term winners, PayPal is the way we've chosen to play the space because we believe there is a lot of room to run in terms of Venmo monetization and their Braintree division, which doesn't get nearly enough credit.
 
"Though for full disclosure, we are watching MasterCard and Visa closely as they lead the way in terms of online acceptance at the major U.S. online retailers," says Zev Fima, a research analyst for Jim Cramer's Action Alerts PLUS investment club.

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.