Visa and MasterCard – The Golden Cross Marks the Spot

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Everyone’s favorite credit card companies, Visa (V) and MasterCard (MA), are flashing a can’t-miss bullish signal after following up their impressive Q3 results with a couple more positive headlines.

First, they agreed to cut the “swipe fees” they charge to merchants in Canada — a move that could result in lower prices for Canadian consumers. Then, on Wednesday, Visa and MasterCard also settled lawsuits with numerous U.S. companies over the fees, including Orbitz (OWW), Pier 1 Imports (PIR), Valero Energy (VLO) and Men’s Wearhouse (MW).

That same day, Visa’s and MasterCard’s charts displayed what’s called a “golden cross,” a technical indicator that occurs when a shorter-term moving average crosses above a longer-term moving average. At the close on Nov. 5, the Profit Scanner powered by Recognia found that the 50-day moving average had crossed over the 200-day moving average for both V and MA, a strong bullish signal.

This particular technical event is based on simple moving averages, in which each day’s closing price is given equal weight over a certain time period. For example, a 50-day moving average is calculated by adding up the last 50 days’ closing prices and dividing by 50. The idea is to eliminate the “noise” of intraday volatility and get a clearer idea of whether the stock is in a bullish or bearish trend.

The golden cross occurs when a shorter moving average (in this case, the 50-day) crosses over a longer moving average (the 200-day). The fact that this did occur on V’s and MA’s charts below tells us that both stocks are in established uptrends in the intermediate term.

110614-v-ma-stockKeep in mind that moving averages use historical information, which means that using them may not get you in at the exact bottom (or out at the exact top), but they do give you a general idea of whether the stock is heading higher or lower.

Another consideration is that moving-average indicators work best in trending markets but can generate false signals in choppy, sideways markets. So it’s wise to look at multiple technical indicators before acting on the signal. Two indicators that work well with moving averages are the moving average convergence/divergence and the momentum indicators.

You can see in the charts above that, for both Visa and MasterCard, these indicators are strongly positive and trending higher. Together with the “golden cross,” these technicals are making a compelling case for owning Visa and MasterCard.

Profit Scanner powered by Recognia can help traders of all levels find new trading customized trading opportunities for finding the best stocks to buy or short in specific sectors, price points, timeframes and so much more. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.


Article printed from InvestorPlace Media, https://investorplace.com/2014/11/visa-v-mastercard-ma-golden-cross-moving-average/.

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