Since the beginning of 2014, Mastercard (NYSE: MA) has been in a downtrend with the stock falling from a high of $84.62 on January 10, to a low of $68.68 on April 11. I have drawn the trendline on the daily chart which marks the highs—sort of. In the case of Mastercard stock, I couldn’t help but notice that the high points tended to come on the open. We see it in early January, late January and again in March. The March high did exceed the open price slightly, but I drew the trendline with the opening prices in mind.
The low earlier this month stopped at the 52-week moving average and can be seen in the weekly chart below. It happened to coincide with the stock hitting oversold levels on the weekly chart as both the Slow Stochastic and RSI readings hit significant lows.
Something else that jumped out at me from the weekly chart is how the stock has seen the short-term rallies halted at the 13-week moving average over the last few months. The trendline is now rolling lower and threatening to make a bearish crossover of the 52-week moving average.
It would seem that one of the two trendlines will have to give way and it will likely happen in the near future. One event that looms that could decide which trendline breaks and that is the earnings report that will happen next Thursday, May 1.
Analysts expect the company to earn $0.72 per share this quarter on revenue of $2.14 billion. The company missed on their last earnings report and that contributed to the slide over the last few months.
The sentiment toward MA is relatively bullish at this point with the short-interest ratio at 2.4 and the current put/call ratio is in the 25th percentile ranking. There are 32 analysts following the stock and 24 have it rated as a “buy” while the other eight have it rated as a “hold”.
Despite the overbought status on the daily chart and the oversold status on the weekly chart, I don’t think you make a play on Mastercard stock just yet. I think what you have to do at this point is exercise patience and wait to see which of the trendlines gives way—the 13-week moving average or the 52-week. With only $5.80 between the two trendlines, you probably won’t have to wait very long. If it hasn’t happened by next Thursday, it will probably do it right after that.
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