As the stock market weakened this past summer, I found a weakening chart pattern on MasterCard (MA) after a long and impressive rally. The charts of MA look weak again. Instead of drilling out to a longer time frame with MA, let's start with a longer view and come in.
This longer-term chart of MA, above, shows a rally of one year plus on weakening momentum readings. This pattern becomes what chartists call a bearish divergence between higher stock prices and weakening momentum readings -- the rate of rise in prices is slowing and this can foreshadow a turn lower. The trend-following moving average convergence divergence (MACD) oscillator is pointed down. MA is below the 40-week moving average. MA has been below the 40-week before, but the rapid move below it recently is different, I think.
In this short-term chart of MA, above, we can see that back in August, MA stopped short of $100. This is where we became bearish. MA sold off and then came back to make a slightly higher new high. For two months, MA failed over the $100 level and is now below the 50-day and 200-day moving averages with their slopes pointing down.
With no bullish divergences on the chart, MA could slip still lower. The key chart point to watch is the $88 level. A close below $88 will weaken the chart picture further.