Today’s trade idea sold off on the news that Facebook was launching a crypto coin, and this has created a good buying opportunity.
As you’ll see in the chart, this company is in a strong trend, is leading the market higher, and just bounced off good support.
Read below for the trade setup details.
As you can see in Mastercard’s (MA) chart below, it has already broken above the May highs ahead of the market.
This is a sign of leadership. Its next bullish condition is the series of lows that sat on the $260 level until the break down on Tuesday. This big spike lower was fueled by concern that Facebook’s crypto-currency would hurt payment processors.
However, the bearishness didn’t last long and only demonstrated that the support in the area of the prior highs, $257, is solid.
Now the weaker holders may have been flushed, and MA can rally.
If Tuesday was a flush then a break over the Tuesday high, $262.25 should begin the next move higher.
As a result, the trade idea is to buy if MA trades over $262.50.
There are two choices for a stop.
The first, and the one I prefer, is under $258. Once MA starts higher, this level should not be broken.
$255 is the low of the correction so it could also be used, but if $258 is broken, I suspect $255 will break too. That’s why I’d choose $258.
Rick Nartarian, Chief Investment Officer
The American Investor Daily