Tighten Up MasterCard Stops

 | May 28, 2014 | 9:00 AM EDT  | Comments
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Stock quotes in this article:

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In my May 21 article, we looked at MasterCard (MA) on the buy side.  Although it did not hit the listed support decision in the article at the $71.07-72.11 area that I was focusing on, it did hold the low made slightly above this at the $72.56 level, just slightly below a .618 retracement at $72.70.

This was followed with some buy triggers and a nice rally into an important interim decision. This is where we have to talk about trade management. It is possible that MA just continues to rally towards the bigger-picture target for the two-step pattern at the $89.12 area. But it would be a good idea to tighten up stops on any current longs for a few reasons. 

First of all, we have met a minor upside target at the area of the 1.272 extension of the prior high-to-low swing (May 1 high to the May 16 low), which came in at $77.84. Note that the actual high was made at $77.89, so far.  Besides the first minor target of the smaller swing being met, there is also a cluster of three other Fibonacci price relationships just above this first extension at the $78.61-79.27 area. It includes the .618 retracement of the Jan. 10 high to the April 11 low, along with 100% projection of a prior major swing and a 1.618 extension. Last but not least, I have time resistance to the current rally with cycles between May 17 and May 30. I also want to watch June 2, plus or minus a day.

 

MasterCard (MA) -- Daily
Source: Dynamic Trader

 

Now, even though my preferred scenario is for the eventual continuation of the rally from the April 11 two-step pattern low, what if I'm wrong? Trailing up a stop or booking some profits is a fine way to go. You can either get back in if this resistance is finally cleared, or you can even go back in on a pullback at the new support decisions I've illustrated on the second chart. 

 

MasterCard (MA) -- Daily Chart 2
Source: Dynamic Trader

 

The pullback zones where I would consider a new buy entry come in at $74.60-75.02, $73.29-74 and $72.25. Typically, I will see if the stock I'm looking at tests one of these areas and holds. If it does, then I go down to the lower time frame chart to look for a trigger that tells me it's worth placing another bet! Bottom line, if you took the buy side of MA, I'm suggesting you trail up stops.  Also consider the pullback zones for another possible entry on the buy side.

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