We first mentioned MercadoLibre (MELI) in the August 8, 2023, edition of the daily stock report when, at $1358.81, the shares were breaking out from a bottoming formation of higher highs and higher lows. Resistance levels were set at the $1700 level and above it when the shares moved higher and consolidated around the $1700-$1800 level for most of 2024. As investors have watched for a year with shares hovering at the $2000 level and a 1-year return (Aug 23 - Aug 24) of 47.6%, we will now check in on the shares of MELI. Starting with our main gauge, relative strength, we can review its relative position within the SIA NASDAQ 100 Index Report, where it is ranked #1. What, not Nvidia? That’s right—MercadoLibre Inc., followed by DoorDash and then Nvidia, with Intuitive Surgical and Cintas right behind in the #4 and #5 positions, respectively. MercadoLibre dominates Latin America's e-commerce and digital payments markets, serving as the region’s premier platform for online shopping and financial transactions, and now it leads at the top of the matrix. However, MELI shares are not out of the woods yet, as they remain in a very precarious position along the psychological $2000 mark while taking a breather. Let’s next look at the candlestick chart and zoom in on that resistance, which might actually be behind us now. The shares moved through the $1800 level, breaking a 4-year series of lower tops, which we have highlighted with the thicker red line. The lighter pink line represents the psychological whole number level and remains formidable resistance. However, given the high relative strength, it is expected that any market rallies will see MELI leading the pack, with its rocket packs ignited. Considering market volatility, purchases on pullbacks to the $1800 level would improve risk-reward parameters. Watch for marked moves through the $2000 level to confirm that the shares are under full control by the buyers.
Point and figure charting excels in trend identification by providing a clear, unambiguous view of price movements and trend reversals, allowing investors to pinpoint major trends and shifts with remarkable precision. With the chart of MELI, we can now see more clearly the breakout from August 2023 at the $1350 level and the subsequent consolidation triangle as the shares went through a period of price discovery at the $1700 level, culminating in the triangle’s completion at $1843.18. Finally, we observe resistance at $2000, a level that also marked the end of the 2021 rally. The shares consolidated down to $600 as they moved into the Unfavored Red Zone of the SIA NASDAQ 100 Index Report, only to stabilize and climb back to $2000—full circle. Should MELI shares surge past $2000, the next major resistance is at $2202.78, followed by $2530.30 based on vertical counts, which also aligns with the whole number in the latter case. Support is at the $1843.18 level followed by $1636.69 and $1542.29. With a Perfect SMAX score of 10 out of 10 (a near-term indicator comparing an asset against various asset classes), MELI is showing strong short-term performance across all asset classes. Many analysts agree that MercadoLibre is a strong company with a bright future. Portfolio managers have included MELI shares across their portfolios and have been rewarded handsomely. Within SIA, shares of MELI are part of our SIA Model, an excellent resource for advisors who understand the power of the SIA NASDAQ Model, which has achieved a 29.85% compound annual growth rate (CAGR) compared to the NASDAQ Composite Index’s 16.22%. SIA accomplishes this with a rules-based approach that allows only top relative strength (RS) names to be included in the 5-stock model. The current names in the model, besides MELI, include KLA Corp, Netflix Inc., Cintas Corp, and Broadcom (with Nvidia officially removed). This year, the SIA NASDAQ 5-stock model is up 51.37% year-to-date (YTD) compared to the NASDAQ Index’s 18.69%, with live trades sent to our subscribers for over 10 years. For more information on these models or to understand the best practices of our AI platform users, please reach out, and we can review this in more detail.
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