Trade of the Day: Visa’s Stock Chart Isn’t Pretty

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Visa Inc (V) — This leading credit card company has the world’s largest retail electronics payment network.

Despite Visa’s dominant market position, revenue growth has been decelerating. In the most recent fiscal year (ended in September), revenue grew just 9%, down from double digits a few years ago.

S&P Capital IQ Equity Research said growth was held down by waning international growth, a negative currency impact, Russian sanctions and data breaches at major retailers. Capital IQ also notes that future risks include increasing competition from mobile payments, reduced demand for credit in the United States and regulatory scrutiny. It analysts recently lowered their 12-month target for V stock by $5 to $75.

Shares have formed a rounding top, which is a bearish formation. On Monday, V stock confirmed that overall bearish view by falling through its bullish support line and closing under its January low of $68.76. The support line connected the lows of April, August and September. Additionally, the MACD internal indicator flashed a sell signal and downside volume was high.

Investors who own shares should sell them at the current market price. And short-term traders should consider selling V stock short at $67 with a trading target of $55 for a potential return of 18%.

As with all short sales, use a stop-loss to protect against theoretically unlimited losses. And be aware that if you hold shares short over an ex-dividend date, you will be required to cover it. Visa pays a 14-cent dividend (current yield of 0.8%), and its next ex-dividend date is Feb. 12.

V Stock Chart
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Article printed from InvestorPlace Media, https://investorplace.com/2016/02/visa-inc-v-stock-trade-day/.

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