M4I trade ideas
MA inside week in front of supply zone, too high to buy?Last year, at least 7 out of 10 stocks looked like this MasterCard weekly chart.
While it's a totally different concept compared to what the market happened.
With the Q1 market fluctuation, MA showed great relative strength to remain a intact weekly uptrend!
It solved the 1st thing-- I don't want to short the supply zone nor the inside week breakdown at all !
2nd question: how about the inside week breakout, is this too high to buy?
The hard part for this setup is that it can only get its 1st kick after it made new all time high.
Other than that, I actually like this long a lot!
Here we got 2 options:
1. wait for the weekly breakout and trade the intra-day bullish setup
2. trade the inside week and put the 1st kick at the supply zone @182.5, and execute careful risk-reward stop!
Let's see how it goes!
MASTERCARD SHORTShort from $192.71
Market Cap - $201.5B
Beta - 0.98
Trailing P/E - 47.59
Forward P/E - 27.34
P/B - 35.46
- Founded in 1996 and based in NY, Mastercard has outperformed it's industry for quite some time now. The company was well positioned for growth given its large market share, ongoing expansion and significant secular shifts towards electronic payments.
- Despite a strong balance sheet, growing ROE, consistent revenue growth and ongoing acquisition - we believe Mastercard is overbought and has some risks to its share price.
- Mastercard has high expenses and continues to face problems in maintaining their operation costs. Over the past five years operating costs have been increasing and in fiscal 2017 their operating expenses increased 16% due to higher advertising and marketing costs and also higher general and administrative expenses. We believe that operating expenses will continue to increase over coming quarters because of investments in long term plans e.g. security solutions, geographic expansion which also means more employee and technology investments and also digital investments. Mastercard expects YoY operating expenses for 2018 to grow at a "low double-digit rate".
- The share price is massively overpriced, their forward P/E is 27.34x which will cause investors to hold off a little and not to pay such a premium. It's forward P/E ratio has been higher than the industry's for quite some time now. Price to Book is also showing signs of the equity being overstretched at 35.46.
- In order to gain new customers and businesses, Mastercard have incurred quite high costs under their rebates and incentives. In 2015 this dragged revenues down 5%, in 2016 2% and in 2017 MA saw a 22% increase in rebates and incentives. If the incentives continue to accelerate we believe that this will affect the company's financials in the not so distant future.
NeroTree Capital rates Mastercard Incorporated as a SELL with a price target of $150.
MA: Double ABCD completionBack in April I was talking about using the elevated volatility to buy some cheap July put spreads on MA with the recognition that we might be early to game. Well...there appears to be a double ABCD completion in progress and I am keeping my fingers & toes crossed. Just a reminder, not only is this an expensive stock, it is a parabolic price action. Hope springs eternal!
Dear Mastercard, I love youThey say never fall in love with a stock… Well Mastercard, I love you. I made so much money of off this stock! And we’re about to make more. Wait for it to pull back into the trendine again, go long and Swing your way back into profits again!
No need to make things complicated, watch price action, look for reaction zones, manage risk and become consistently profitable.
Need help in your trading? Send me a massage with your questions.
Uptrend continuationWith overall markets starting to rally gain we can also see that the strong uptrend of MASTERCARD is looking to resume its uptrend. Personally I'd like to get in on a pullback and/or a trendline bounce. 175 would be ok right now.
Looking to get in and ride this one as a trend trade just like all of 2017!
MA: Parabolic price action & valuations = Massive ShortWhen I see parabolic price action like Mastercard's weekly chart, I start thinking on how to structure a short because we all know parabolic price action always always ends in tears. It does help that MA is trading at....3.5x of its average 13-years P/B and has a...-0.25% real earnings yield (adjusted for US 10 T-bond). With MA implied vol trading at an elevated 34 and a nice skew, one can structure a July -5/-15 put spread for c.1.6% with a max c.4x payout if MA hits the min price target of $144 (being the weekly 38.2% retracement). I am most probably too early on this call with my short term tactical view being positive as we head into earnings season (MA reports 2 May'18) but...it is either you get the high vol or a better entry price. Either way, I would like to get some optionality into the books.
MA Short & Market ComparisonGiven the recent small rise in cryptocurrencies, as well as less reliance on credit, MA seems to be a short holding strategy for the year to come. This month in general because of policy changes and competition, have been non profitable. However, the yield is at 0.66%, and a 0.11% expected return average the next few days. Mastercard as a company though is investible stock wise for some returns, but won't be as investible for an entirely long term holding. This is even given its past "bullfrog" breakout. Overall, I would keep it for a short time period but would consider it as volatile for an extremely long term holding.
MASTERCARD (MA)The Current stock price is above both the 150 day and 200 day moving average.
The 200 day moving avg line is trending up (for at least one month)since October
The Current stock price is trading above the 50 day moving average.
The current stock price is at least 30 percent above its 52 week low. (appox 40% above it's 52 week low)
The current price is 95% of it's new high.
Credit Suisse
Rating since 10/12/09 OUtperform
TheStreet
Rating since 07/31/09 BuY
Ford Equity Research
Rating since 12/01/17 Strongbuy
MarketEdge
Rating since 12/01/17 Long
