Take a look at the 9-month chart shown below on MasterCard Inc (MA). Note the bullish Cup with Handle formation, that resulted in a strong break out above the 170 resistance level. The measured move in regard to the Cup with Handle indicated a move to 220 ((170 - 120) + 170 = 220). The stock managed to push all the way to 225, but has since felt some selling pressure.

We've noted a potential Head and Shoulders formation in the works in MA since it completed the measured move in regard to the previous cup with handle formation. The Head and Shoulders is nearly complete. It simply needs to break neckline support at approximately 185 in order to confirm the reversal pattern.

MA is sitting on an uptrend support line. We're watching the action here. If the stock continues to hold uptrend support, we'll have a failed Head and Shoulders on our hands, which could be a decent buy signal. If it breaks uptrend support and H&S neckline support, we feel a bearish position is in order.



Over the last 60 days, MBIA Inc (MBI) has created a complex inverse Head and Shoulders reversal. Last Monday, MBI broke through the neckline and has held above since. This is a bullish indication that suggests MBI could rally as much as $10 from current levels. A $10 rally in MBI represents a +65% gain from current levels.



Andy Swan is co-founder and head trader for DaytradeTeam.com. To get all of Andy's day trading, swing trading, and options trading alerts in real time, subscribe to a one-week, all-inclusive trial membership to DaytradeTeam by clicking here.