Masco Nears Key Support

Masco Corp. (MAS) shares are holding today at $19, but I expect another dip soon. Under very heavy pressure, MAS held key support near the $18.50 area on Friday. This support area, which includes multi-week lows in April, held again Monday, but I am doubtful the building-materials company will maintain a rally from here. The early June lows of $19.50 may prove quite heavy in the near term. New lows may be on the way before a new base can be built.

Masco Corp. (MAS) Source: TradeStation View Chart » View in New Window »

I expect MAS to take out the April lows but I don't expect the damage to be overwhelming. The stock has been probing oversold territory and is already off more than 15% from last month's peak. I am looking for a retest of the 2012 highs as a new base develops. This would require a drift below the 200-day moving average, which hasn't been violated in almost a year. Pressure from a drop below $18 could set the stage for a healthy bottom. Shares would be deeply oversold at that point, just as support near the 2012 peak near $17.20 comes into play. This key level would also complete a 50% retracement of Masco's powerful bull run off last July's lows. From late July 2012 to mid-May of this year, the stock was a 100% gainer. ...26 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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