Going long MasterCard (MA) when fear gripped the markets back in 2009 was a great decision. There are still many believers in MA looking for still higher prices, but relying on the charts and the technical indicators we tend to favor, I would be cautious and protective rather than fearless and overly bullish.
In this daily chart of MA, above, we can see three rally attempts to the $100 area in August 2015, November/December and recently in April this year. The On-Balance Volume (OBV) line tracked prices up and down in the past nine months. The 50-day moving average line would have generated a number of buys and sells the past 12 months, including a death cross of the 200-day average in early February. As prices rallied from their February low, the price momentum diverged from the price action. This bearish setup with prices going up, but the momentum study unchanged or weakening is a subtle sign of underlying weakness.
In this weekly chart of MA, above, we can see the problem MA is having at the $100 level. Prices are above the flat 40-week moving average line and the MACD oscillator gave a cover shorts buy signal in March and could cross above the zero line for an outright buy signal. The weekly OBV line is steady, which is OK, but many times the OBV breaks out to a new high ahead of prices, but not in this occasion. A close below $93 on MA would take prices below the 50-day and 200-day moving average lines as well as breaking nearby support. If you are long MA from lower levels then protecting your profits could be priceless.
