For his first Executive Decision segment of "Mad Money" Tuesday, Jim Cramer sat down with Ajay Banga and Michael Miebach, the outgoing and incoming (respectively) CEOs of Mastercard Inc. (MA) . Miebach is currently chief product officer of Mastercard, which is a holding of Cramer's Action Alerts PLUS charitable trust.
Banga said he has had a great run over the past 10 years, but knowing when to step aside is just as important as knowing when to step in. Miebach said while Mastercard is seen largely as an old payment processor, the company is forging ahead with digital commerce, too. PayPal Holdings Inc. (PYPL) is one of Mastercard's largest customers and it partnered with Apple Inc. (AAPL) and Goldman Sachs Group Inc. (GS) to introduce the AppleCard.
Let's check out Mastercard's charts here on Wednesday morning.
In this daily bar chart of MA, below, we can see that prices have quickly turned lower to generate some bearish signals. MA has just closed below the rising 50-day moving average line. The slope is still positive but it is a lagging indicator and it will take time for the slope to turn negative. The 200-day moving average line intersects around $282 which puts it right in a potential area of support. The trading volume has surged sharply, telling us that traders and investors have voted with their feet. The On-Balance-Volume (OBV) line has made a turn lower, telling us that sellers of MA are now more aggressive and the Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside for a take-profits sell signal.
In this weekly bar chart of MA, below, we can see that prices have turned to the downside and appear headed for a test (or worse) of the rising 40-week moving average line. The weekly OBV line shows a slight bend lower this month and the MACD oscillator narrowed sharply toward a weekly take-profits sell signal.
In this daily Point and Figure chart of MA, below, we can see the recent decline ('O's") and a potential downside price target in the $258 area. If MA reaches this target it would mean that the prior support area would largely be broken, opening the way for still further declines.
Bottom line strategy: The charts of MA suggest there is further risk ahead. Check your cost basis and take appropriate action. Hope is not an investment strategy.