Is there much left to squeeze out of the never ending bull run on Mastercard?
Fundamental indicators: for the long time Visa and Mastercard were undefeated corporate giants with unbelievable circa 40% profit margins and growing exponentially since 2008 crisis. Let's look at some factors, if any, that may break this trend
Recession - warning macro signals suggest that world economies are slowing down and recession is possible within a year, this may be reflected in the forecast of the company
Eastern Europe conflict - ban on use of Visa and Mastercard in Russia will certainly have an impact on earnings
P/E - is quite high at 39x and possible correction may let some steam out of the overpriced stock
Technically:
Following the correction of 2020 which took a form of Running Flat (ABC, 3-3-5) it is very visible that the price is moving very choppy which usually suggests that there is not much energy left in the bull run and Ending Diagonal is developing
The Ending Diagonal takes structure of 3-3-3-3-3 and the current proposed idea indicates that waves 1-4 have completed and wave C of 5 is about to begin to update the high of $402
What's next - given that the last correction was nearly 540 days, the next one will be even longer once the Diagonal is completed. The shape and depth will be clear during the development but it's likely for the price to test levels of 250 (0.382x Fibonacci retracement) or even $200 which is 0.5x.
It will be clear what scenario is developing following the upcoming earnings report.
Please share your thoughts in the comments and like this idea if you would like to see more stocks analysed using Elliott Waves.
@wallnutguy, it looks like doesn't it. Are you planning to trade it?
rozatet
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It looks similar to the scenario you've shared about Apple
vitalalyt
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@rozatet, it's a good question, I think this is a common pattern that develops on many stocks, choppy move upwards with potential update of highs before something triggering mass correction on the market, so this is the time for investors to re-evaluate their positions and portfolio as a whole