Shares of payment processing company Visa Inc (NYSE:V) are higher by about 15% year-to-date and they have crept up toward a key technical spot, just in time for the earnings report on April 20. Here are two ways to profit from V stock following its upcoming earnings report.
During my career on Wall Street, I learned a great deal, but the one memory I keep remembering is one of my former managing director bosses reminding me to ‘buy low and sell high’ each time he stepped off the trading floor.
At the time I found his comments amusing while respecting it. Truth be told, however, I didn’t fully appreciate and understand the importance and honesty of his remarks until years later.
In this modern world of instant communication and analysis the explanation for events in financial markets is becoming more complex, yet I find that what has gotten lost over the years is the appreciation for price action and it being the ultimate arbiter. Please keep this in mind as I walk you through the below charts of V stock and the possible ways to trade it after earnings.
V Stock Charts
From a multi-year perspective we see that Visa stock has largely traded in a well-defined up-trending channel. Very simply, the lower-end of the range provided good probability buying spots, while the upper end of the range was and likely will continue to be a better spot to lighten up on longs or even flip short for quicker hitters.
Furthermore, we see that the lower end of this range is supported and coincides with the blue 100-week simple moving average. Through this lens, it likely doesn’t take a trader too long to see that the current spot near the upper end of this multi-year range likely provides lower odds of a big new rally higher for V stock.
However, on the daily chart, we see that in February, Visa stock, following its most recent earnings report, gaped and rallied out of a multi-month consolidation phase that led to a rally into mid-March. Over the last few weeks, V stock has largely trotted sideways and last week, for the first time in months, it bumped into and found support at its yellow 50-day simple moving average.
From here, traders now have well-defined support at the 50-day moving average and horizontal support around the $88-mark and resistance from the above bigger picture chart in the low $90 area.
If Visa stock breaks and holds below $88 on a daily closing basis following the earnings report, then better support likely does not come in until the mid-$80s. This could allow traders to play the stock from the short side.
Alternatively, if V stock rallies or holds steady after earnings, then the long side will continue to make sense toward the low to possibly high-$90s as a next major upside target.
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