There's been some talk lately that PayPal (PYPL) - Get Report is poised to "outperform" heavyweights such as Alphabet, Amazon and Netflix. Given that those other stocks are headed for big declines, however, "outperformance" may not mean much. If you buy PayPal and it loses 30%, but those other stocks lose 40%, will you be happy? 

Following is the daily bar chart of PayPal, showing its price behavior since its (second) initial public offering last July. At best, the stock has been "dead money." At worst, it's been down 25%. The most recent rise off the test of $37 appears to be almost over, with a quick pop to $40 possible. Then, the path of least resistance should be the resumption of the decline off the swing high of $42, with at least $34 +/-$1 as the target. 

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That will be the next time a buying opportunity is objectively possible. Only if you are following the "outperform" fallacy would buying at the current price be justified. Why?

Notice the diving stochastics, which have several days to fall before attempting to bottom in the oversold green zone near the 10% threshold. Also, since last July's peak, the larger movements have only manifested in three-wave structures, which are corrective. One of those just ended at the March swing high near $42. This implies another down/up/down structure toward the higher green box in the price pane, with real potential for further bearishness toward the lower green box. Ideally, the bright green oval, within the lower green box, is where PayPal will eventually bottom, as that would set up a tremendous buying opportunity for an eventual rally above the July peak.

Once PayPal enters the $34 +/-$1 zone, we will see if our decision support engine signals a new buying alert. 

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