Expect Visa’s Strength Position to Continue in the Months Ahead

Positive trends are building for Visa (NYSE:V) stock, which makes it a standout stock for investors to consider now.

Expect V Stock's Strength Position to Continue in the Months Ahead
Source: Tada Images / Shutterstock.com

Without a doubt, 2020 has been a tough one for the broader averages. And Visa hasn’t been immune. But the broad-based novel coronavirus correction, which swept the world’s largest credit card and payments processor lower by as much as 35% at the market’s March bottom, has given way to improving conditions and forecasts worth investors’ attention.

Alongside the Dow Jones Industrials, blue-chip constituent Visa is firmly higher Monday on bullish macro reports. There’s promising vaccine news from biotech Moderna (NASDAQ:MRNA). Also, a firm, bullish-leaning interview from Federal Reserve Chief Jerome Powell on CBS’ 60 Minutes has Wall Street’s undivided attention following last week’s raft of weak-sounding economic data and decline of more than 6% in the Dow Jones Industrial Average.

The drivers have allowed the benchmark index to tack on roughly 2.75%, though stymied by the 50% – 62% retracement area. The resistance area has held the blue chip average in check for the past several weeks as gains of as much as 36% are digested. But shares of Visa are doing even better for its investors to start the trading week.

Visa is up 3.90% in Monday’s first half. Today’s out-performance is also demonstrating significant relative technical strength as shares hit fresh rally highs after decisively clearing the 62% Fibonacci level for the first time since the March low. What’s more, V stock is now positive on the year. By comparison, the Dow remains in the red by about 13%.

Behind the impressive bid, Visa’s Chief product officer reported 13 million Latin American customers made e-commerce purchases for the first time ever during the first quarter of 2020 amid the coronavirus. At the same time, Visa saw its U.S. online spending, sans travel-related business, jump 18%. The company estimates those trends will continue as the pandemic acts as a major catalyst for “massive” digital acceleration globally.

V Stock Monthly Chart

V Stock Monthly Chart
Source: Charts by TradingView

Despite the gains in shares already, the provided monthly chart suggests Visa isn’t out of reach for interested buyers. Currently, shares are on the cusp of a bullish stochastics crossover as the stock climbs towards the high of its engulfing March candlestick and 76% retracement level. With backing from the secondary indicator, a rally of a couple percent through resistance sets up a test of the base high and ultimately a breakout to fresh all-time-highs.

As with the company’s ad campaign, Visa has the looks of it being “everywhere you want it to be.” Still, this isn’t a time to throw caution to the wind. To be sure and following its short-lived, but fierce bear market, Visa is in a much stronger position than when shares were trading at the same levels back in January. Nevertheless, the importance of a continued healthy market environment can’t be overstated in Visa’s relative and absolute price performance.

For the time being, my suggestion for buying Visa is to wait on modest price confirmation from a lagging Dow Jones before buying V stock. I’d suggest similar advice same for purchases in leading blue chips Home Depot (NYSE:HD), Microsoft (NASDAQ:MSFT) or Apple (NASDAQ:AAPL).

At the end of the day, time, much like price, can heal wounds. If the market’s congestion pattern of the last several weeks can be cleared on a closing basis, the chances for a second leg in the market’s rally are improved greatly. And in tow, or doing the towing, V stock should be leading and vastly reducing the chance for some variation of a double top pattern to emerge on its price chart.

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 market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits. 


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