The MercadoLibre (MELI) Breakdown

I’m going to be completely honest and say that I absolutely know nothing about MercadoLibre (MELI) when it comes to their company and their products/services that they offer, but Mike K in our Trader Network brought them up as a potential pairing with the Amazon.com (AMZN) (post that I did earlier this week), so I thought it’d be appropriate to go over MELI as well. 

So for this particular post, I am going to focus solely on the technicals of MELI:

• Unlike the S&P and other indices, MELI maintained its upward trendline off the October lows when the market retraced 61% and broke trend-line support. 
• As a result, MELI has done a great job of weather the markets in the two weeks leading up to Monday. Back in mid-October, MELI created the perfect bullish island gap reversal, which it has greatly benefited from, but the price pattern appears to be maturing some. 
• That leaves us with two significant gaps that likely need to be filled. Let’s not mention the fact that the S&P has two large gaps now of its own to fill, and you got the potential for a significant pullback in MELI. 
• If it breaks $80, look for a move to $76.50. After That I think it goes downward to $60-63. 
• However, its highs of late is $89.99, that means if it can hit the nice round $90 price mark, we could see it make a run for the magnetic $100 price level (kind of like a penny stock making a run to $1.00 for the first time).
• Volume looks average for the entire year so there are no clues there.
• Support and resistance is well defined in the chart below. 
• If this market can’t sustain the latest rally in equities (which ultimately I don’t think it will) look for a double top to be put in place in the short-term and to make that move I detail above rather quickly.