MasterCard Inc (MA) Has Checked Out

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Shares of payment solutions company MasterCard Inc (NYSE:MA) began showing signs of exhaustion in early April, and that was confirmed by price action following the company’s earnings report on April 28.

MasterCard Inc (MA) Has Checked OutIf that sounds familiar, it should — we saw similar action in Visa Inc (NYSE:V) a few days prior when it reported earnings.

The picture doesn’t look good for MasterCard stock. Now, though, we at least have defined areas of resistance to lean against so we can go short for trades.

MasterCard’s first-quarter earnings declined 6% year-over-year, but still managed to beat analyst expectations, and came on a 9.7% improvement in revenues. So in some ways, that at least bucked the trend of many other companies who reported worse results.

Nonetheless, investors voted by selling MA stock after the report.

MasterCard (MA) Stock Charts

We see that longer-term investors have a well-defined simple diagonal support line to defend. This line once again held like the champion it is at the February lows and allowed MasterCard shares to catapult nearly 30% higher into the late April highs.

At the same time, however, we can see on the weekly chart that MA stock last week left behind a bearish exhaustion candle as shares closed the week well off its highs.

So far this week, we are seeing marginal follow-through selling. although with two trading days left this week, of course is not yet over. Also note that last week’s highs formed a lower high versus the November 2015 highs. Given the distance the stock traveled off the February lows and the steep slope associated with it, the stock at the very least likely capped here for some time.

maweekkly
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On the daily chart, we see that yesterday, MA stock for the first time since February closed marginally below its yellow 21-day simple moving average. On April 28 after the earnings report, MasterCard initially spiked higher, but then closed near the lows of the session, giving us an exhaustion buying candle.

MasterCard MA stock daily chart
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Over the past few trading days, the stock has also broken below its February uptrend line, all of which now puts the odds in favor of a move into the low $90s as a next downside target. The $92 area lines up with a 38.20% Fibonacci retracement of the entire February-April rally and thus makes a good price target for active investors to focus on.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/05/mastercard-inc-ma-stock-checked-out/.

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