Tuesday, April 1, 2008

Mastercard - Priced to Perfection For Profit Taking Selloff?



Shorting opportunity for Mastercard (MA)?

-Near 52 week high
- Economy in recession
- HUGE run from the low of $183 to now ($222+) in two weeks time = $40!
- All indicators near max out in the short term
- bid volume is clearly deteriorating
- End of quarter window dressing (3/31). April 1st being the new quarter mean winners could be susceptible to heavy profit taking.
- Money inflow is topping out.
- High volatility stock, could easily give back gains just as fast as it gets them.

Opinion:

Mastercard since its IPO debut has grown a whopping 400% in a little over two years. Absolutely stunning performance without a doubt (Which also leads me to believe why Visa would at least double since it is 2x the size of MA). But like all stocks it is not immune to profit taking.

With it reaching near its 52 week high on low bid volume, this could be setting up for a big move down due to profit taking.

Plan: Initiate short position at $230+. Stop loss at $240-$245. Cover near its middle bollinger band or 50DMA. That puts it at ~$200

=$10 dollar downside risk, $30 dollar upside possibility per share sold short. 2 week target.

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