Mastercard charges lower, breaks key support
Shares of global payment solutions company Mastercard (MA) dropped 3% on Thursday, cutting below a key support line. Active investors and traders now have a defined risk trade setup on the short side.
The stock prices of credit card providers like Mastercard and Visa have seen massive gains over the past few years, but the action has been decidedly more muted in 2014.
Source: Saxo Bank
On the daily chart, which is where my focus for this current trade setup in MA lies, the stock has traced out a narrowing wedge for much of this year, with the medium-term moving averages (50-,100- and 200-day simple moving averages) all trading closely together.
Management and risk description
The biggest risk to this trade, considering the still-constructive pattern of the broader financial sector, is that Thursday's breakdown was just a fake-out move that quickly gets recaptured by the bulls. Should this happen, the bear case for the stock's near term would be off again.
Entry: Short the stock using the CFD at $75.50 or lower.
Time horizon: Two to four weeks.
— Edited by Michael McKenna
Non-independent investment research
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