Mastercard Always Drops When This HappensMastercard has been in a bull trend since 2013. On five occasions through this bull, three of the technical indicators discussed below are at the same or higher levels than they are now. I have laid out the reasons and levels to which the stock may dip while it most likely continues its overall bull trend.
When we look at technical indicators, the relative strength index (RSI) is at 76.2216. RSI tends to determine trends, overbought and oversold levels as well as likelihood of price swings. I personally use anything above 75 as overbought and anything under 25 as oversold. Currently the RSI is oversold.
The positive vortex indicator (VI) is at 1.3193 and the negative is at 0.5613. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action is moving downward. The positive and negative values are currently at extreme levels which the stock always retreats.
The stochastic oscillator K value is 95.5822 and D value is 96.0369. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals and short-term activity. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the stock is trending up. When the D value is higher that the K value the stock is trending down. The stochastic is currently overbought. The D value just crossed above the K value meaning the stock is most likely beginning its descent.
Since the current long-term bull began in 2013, there have been five times when the RSI and the positive VI were at or above their current close while the stochastic was also overbought. These occasions led to a drop in the stock. The median drop occurs over 10 trading days and results in a 5.97% loss. The minimum drop on these occasions was 3.19%.
Considering the RSI, TSI, VI and stochastic levels, the overall direction favors a move to the downside. Based on historical movement compared to current levels and the current position, the fund could drop at least 3% over the next 25 trading days if not sooner.
