Visa Stock Makes a Major Statement

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Shares of global payments network company Visa (V) rallied strongly Thursday on the back of the company’s report from late Wednesday. The stock’s strong showing also helped pull the entire Dow Jones Industrial Average higher and resulted in a major breakout move to fresh all-time-highs for Visa stock.

beat the bell stock investing adviceWhile V shares don’t have to be immediately chased higher after such a strong one-day move, Visa stock does now offer good reference levels and risk/reward for a continued climb in coming months.

Visa Earnings

Visa’s fourth-quarter earnings came to $1.72 per share, 7% lower year-over-year and below the expected $2.10. However, revenues grew almost 10% to $3.23 billion, topping the $3.19 billion that analysts were looking for.

But what really got the juices flowing was Visa’s announcement that its board approved a new $5 billion share buyback program; stock repurchases have been a big trend in recent years and have contributed to the stock market’s gains.

After the earnings report, analysts maintained a positive posture on Visa stock, with companies like Stifel Nicolaus and Credit Suisse keeping their respective “buy” and “outperform” ratings at price targets of $280 and $260.

Visa Stock Charts

This gets us to the price action, which given Thursday’s big jump made a big statement. Shares of payment and credit card companies like Visa have risen strongly in recent years, but in 2014 it took a bit of a breather (just like the broader stock market).

This is clearly represented on Visa stock’s multiyear weekly chart, where after a strong multiyear move, shares this year consolidated in a triangular formation. Consolidation moves such as these are healthy, but we need a breakout to confirm trend continuation — and that’s exactly what Thursday’s sharp rally did.

visa stock chart daily
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On the daily chart, looking closer at the 2014 consolidation price action in V stock, note that the stock’s lows in April and mid-October formed a double bottom (blue bubbles). At the same time, the stock’s series of lower highs formed a clear line of risk for traders to focus around (black diagonal). Thursday’s 10.24% rally blasted the stock not only past this diagonal resistance line, but also past its all-time highs from January, and all of that on a massive jump in volume.

visa stock chart weekly
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Longer-term investors now have a clear confirmation that Visa stock is ready to move higher after its 2014 consolidation move. The more active investors and traders however now have two choices:

  1. Wait for Visa stock to consolidate for a few weeks, preferably above the $225-$227 area, and buy the stock on any bullish reversal day for a move into $245-$250
  2. The real quick hitters can try a trade toward $245-$250 if the stock breaks past Thursday’s intraday highs near $239.50 in coming days.

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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2014/10/visa-stock-v-charts/.

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