What’s in your wallet? If you’ve been carrying Visa (NYSE:V) stock in your portfolio, there’s plenty of dollars to be sure. And in front of earnings this week, it’s also time to keep what’s yours and take profits in Visa stock. Let me explain.
To say Visa shareholders have had a nice run is an understatement. Since the financial crisis low ten years ago V stock is up a staggering 1,500%, give or take 100% or so. But trends like Visa’s shouldn’t be taken for granted.
Bottom line, all trends like Visa stock’s do come to an end. I’m not simply talking about the V stock chart either. Consistent profit and sales beats over the past few years have been the norm for Visa. But taken together, that’s worrisome. And considering expectations polled through crowd sourcing outfit Estimize are even higher for Visa to deliver yet again, maybe even more so.
Whether a corrective period or, worse yet, a bear market are the result of an actual earnings disappointment or a perceived quarterly slight from demanding expectations, the risk for holding through a report is increased in Visa right now. And from there, conditions could rightfully get a whole lot worse for Visa stock into the foreseeable future.
Visa Stock Monthly Chart
Most investors reminisce about owning the next big thing in technology. And no doubt gains in stocks like Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL) or a name like Netflix (NASDAQ:NFLX) are notoriously impressive.
Still, as expressed above, Visa stock is no slouch either. More concerning, unlike the bull runs in AMZN, AAPL or NFLX, which have included tumultuous corrective periods to challenge even the most fervent bullish investors, V has barely been tested over the past decade.
Click to Enlarge
The closest technical test for Visa bulls was last winter’s ubiquitous market correction when shares corrected by 19.62% or 2015’s drop of 21% in less than two months’ time. And those incidents barely constitute a bear scare which official signals at 20% or more. Bottom line, as well as simply looking at the squiggly price line of Visa stock’s monthly price chart, I’d strongly caution all trends do come to an end and sometimes quite abruptly.
Visa Stock Strategy
Given the nearly uninterrupted technical run Visa stock has enjoyed and shares now facing some angular trendline channel resistance, as well as a questionable stochastics set-up, taking profits in front of Tuesday night’s earnings report makes prudent sense.
For those investors looking to pick up long exposure in V, I’d personally wait for a more meaningful correction. And in our estimation, that correction will be one which can simultaneously test the patience of bulls, as well as reintroduce key and nearly forgotten technical supports no stock is immune from.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
