Earnings and Jobs Data Sparked Mastercard Breakout

Published on Friday, 03 February 2012 16:23 Written by David Becker

New York, February 3^rd (TradersHuddle.com) – Better than expected earnings and robust employment data released by the Department of Labor, pushed Mastercard (NYSE: MA) above resistance levels, creating a breakout.  For the 4th quarter the company reported net income of $19 million, or $0.15 per share, down 95 percent from $415 million, or $3.16 per share, a year ago.  Earnings rose to $514 million, or $4.03 per share, beating analysts' $3.91 per share estimate.

Friday's employment report was a shock to most investors.  Expectations even after a solid ADP report on Wednesday, were for an increase of 125,00 jobs.  Investors were surprise to see a report that showed an increase of 243,000 non-farm payroll jobs.  Additionally, the unemployment rate came in at 8.3%, lower than the expected 8.6%.  Revisions over the past three months were also in a positive direction.

Mastercard has been in a 340-380 range for the past three months, awaiting an impetus that would generate a new trading range.  After the earnings release MA surged through the 50-day moving average which had been the cap of the lower half of the current range.  Friday's Employment report, created enough momentum for MA to break through resistance.  The close above 387.90 was the highest close on the stock during the past 10 years.

The RSI is near 71, which is in the overbought region, but not an extreme reading.  The RSI is the highest it has been in a year, and could be a sign of continuing momentum.  The MACD is showing very strong momentum with an index level of 5, as the 12-day moving average diverges away from the 26-day moving average.  The widening of the moving averages is a clear sign of strong momentum.  The index lever reading is the highest it has been during the past 12-months.