DISQUS

Bob Brill · 2 months ago

interesting pulse of the market, Joey

Dave · 2 months ago

Hi there,
Interesting analysis! Anyway below are my noobish thoughts:

I'll agree we are definately looking at a bearish play on MCO based on the following:

1- Descending Triangle pattern (bearish continuation pattern)
2- Lower peaks and lower troughs (also bearish)
3- The 50d-SMA has crossed under the 200d-SMA (intermediate/long-term bearish trend)
4- The 20d-SMA has also crossed under the 50d-SMA (shorter term bearish trend)
5- Finally, the price has actually crossed below and continues to be below the 200d-SMA!

However, although I personally don't follow MCO, taking a look at it via ETrade Pro (which I am required to use due to restrictions beyond my control), I can say you can short perhaps if you are in this for the longer-term, but I wouldn't start to short this yet (and perhaps go long) due to the following:

1- There is a near-term inverted head-and-shoulders pattern that has formed. The left shoulder begins around 9/2 or 9/3 with the lowest point of the head occuring on 9/25 and now we are starting to form a right shoulder. However, the price I would wait for this to pull above is actually not the resistance line seen in your graph above, but rather 25.92-26.00. That price is actually the peak of the left shoulder which, if it were to close above, would indicate a breakout to the upside for this particular near-term pattern. Also, this 25.92-26.00 line I see is confirmed on dates 8/21, 7/24, 6/26, and finally 6/18.

2- I personally use a 3d-EMA, 8d-EMA, and 20d-EMA for my very short-term views. Based on an extremely short-term view, both the 3d-EMA and 8d-EMA have crossed over the 20d-EMA and the 3d-EMA is now above the 8d-EMA.

3- Using a daily graph and looking strictly at the past 200 days, I have seen the 200d-SMA act as a place where investors have actually bought in, thus serving more as a support than a resistance when price has reached that line. However, since breaking that level a 3rd time or so on 9/17, it will be interesting to see whether or not the price can actually cross over the 200d-SMA. If so, I'd say perhaps we might see a bounce to the upside, but we'd need to wait for confirmation of a breakout of the 25.92-26.00 price level I mentioned above. If and when that occurs, a target price would be 33.50 (gotten from the difference between the peak of the left shoulder and the low of the head, and then adding that difference onto the left shoulder). An in between resistance level we may meet is the 30 level. Get past that and you are looking at 31.78 as a resistance level, the highest intraday high reached within the past 200 days.

4- Finally, I remember reading that you don't look at technical indicators
insomuch as to help you actually determine an entry point or exit point - I don't either - but the Slow Stochastic has remained overbought for now 6 consecutive days, actually very bullish in it by itself.

In anycase, in my humble opinion, I personally would hold off shorting anything until further confirmation. In the very short-term I might even consider going long on this, although it's safer probably to wait at least another COB day.

Cheers!