Does Visa's Stock Performance Foreshadow Macro Problems Ahead?
These shares have been working lower from March. What should we take from that?
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Credit card company Visa V reported its latest quarterly results Tuesday night. Visa's earnings met expectations but revenue missed as payment volume growth slowed.
Share prices gapped lower and closed weak on Wednesday. The shares are bouncing Thursday but let's focus on the trend and the state of the indicators.
In the daily bar chart of V, below, I can see that the shares were working lower from March and finally gapped below the rising 200-day moving average line on Wednesday. The faster 50-day moving average line has been in a downward path for the past four months. I noted above that prices were bouncing Thursday but the odds favor a resumption of the decline.
The daily On-Balance-Volume (OBV) line has been stalled the past three months as buyers and sellers of V are largely in balance. The trend-following Moving Average Convergence Divergence (MACD) oscillator has been in a downward trend since February.
In the weekly Japanese candlestick chart of V, below, I see a bearish pattern. The shares are trading below the 40-week moving average line.
The weekly OBV line has weakened since March. The MACD oscillator has been correcting lower since March and is nearly down to the zero line.
In this daily Point and Figure chart of V, below, I can see a downside price target in the $237 area.
In this weekly Point and Figure chart of V, below, I used a five-box reversal filter. Here the software suggests a very bearish price target in the $190 area. We'll see.
Bottom-line strategy: Visa says that Asia’s recovery has been slower than expected and that can have wide-ranging implications for many more companies besides Visa. I would expect that the current bounce in V fails and prices turn lower in the days and weeks ahead.
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