Mastercard Incorporated (MA) shares rose about 2% in early trading on Wednesday after holiday sales recorded their largest annual increase in six years. Mastercard's SpendingPulse showed that spending increased 5.1% to $850 billion. In terms of spending trends, the report showed a 19.1% increase in online shopping and a 1.3% decrease in department store sales.

During the third quarter, the company reported a 15% increase in revenue to $3.9 billion, beating consensus estimates by $40 million, while adjusted earnings per share reached $1.78, beating analyst estimates by 10 cents per share. The sharp increase in holiday spending could point to a strong fourth quarter.

Goldman Sachs also listed Mastercard stock as one of its "high quality" defensive plays, alongside Alphabet Inc. (GOOG) and PepsiCo, Inc. (PEP). The analyst firm recommends that investors take a defensive posture next year and is concerned about a recession in 2020.

Technical chart showing the performance of Mastercard Incorporated (MA) stock
‚ÄčStockCharts.com

From a technical standpoint, Mastercard stock broke down from long-term trendline support in early October before trending sideways over the following three months. The stock rebounded from trendline support toward S1 support at $182.69. The relative strength index (RSI) is near oversold conditions at 36.74, but the moving average convergence divergence (MACD) remains in a bearish downtrend, suggesting further downside.

Traders should watch for a breakout from S1 support toward heavy resistance at pivot point and moving average support levels near $196.50. The stock could continue to trade in this range given the bearish MACD reading. If the stock breaks down from trendline support, traders could see a move lower to S2 support at $164.32, although that scenario appears less likely given the current oversold conditions.

The author holds no position in the stock(s) mentioned except through passively managed index funds.