Here is your Bonus Idea with links to the full Top Ten:
Mastercard, $MA, has had a long steady run higher. The pullbacks along the way have generally found support at the 50 day SMA and occasionally dipped lower to the 100 day SMA. This has been the pattern for the last 2 years. For the last 3 weeks the stock has been holding in a very narrow range between 190 and 194. Friday it re-connected with the 20 day SMA for the first time in over a month.
As this happened the Bollinger Bands® are squeezing in. This is often a precursor to a move. The RSI is in the bullish zone and resetting lower as it consolidates. The MACD has crossed down and is resetting as well. There is support at 190 and the 184 with a gap to fill to 180 below that, then 172. There is no resistance above 194 but a Measured Move on a break higher would give a target to 212. Short interest is low under 1% and the company is expected to report earnings next on July 25th.
The June monthly options chain shows large open interest in the put side at the 190 strike and then lower at 185. On the call side it is biggest at 195 and 200. In July options open interest on the put side is biggest at 185 and it is large from 185 to 200 on the call side. In the August chain, the first spanning the earnings report, the open interest is still building but is big at the 185 call. October options which have been open for trading longer show the biggest open interest at the 195 call strike.
Mastercard, Ticker: $MA
Trade Idea 1: Buy the stock on a move over 194 with a stop at 190.
Trade Idea 2: Buy the stock on a move over 194 with a July 190/185 Put Spread ($1.85) as protection, and selling the July 200 Call ($2.09) to pay for it.
Trade Idea 3: Sell the stock short on a move under 190 with a stop at 194.
Trade Idea 4: Buy the June 190/185/180 Put Butterfly ($1.00) on a move under 190.
After reviewing over 1,000 charts, I have found some good setups for the week. This week’s list contains the first five below to get you started early. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which heading into Memorial Day Weekend, the unofficial start of summer, sees equity markets remaining in consolidation.
Elsewhere look for Gold to possibly confirm a reversal higher while Crude Oil pulls back hard in the uptrend. The US Dollar Index looks to continue to move to the upside while US Treasuries race higher in the short term. The Shanghai Composite looks to have resumed the downtrend and Emerging Markets continue to hold over support, marking time.
Volatility looks to remain at very low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Despite that good news equities continue to plod along sideways mainly. The longer timeframe remains constructive with the IWM leading in the shorter timeframe but the QQQ looking to catch up. Use this information as you prepare for the coming week and trad’em well.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.