Practice Discipline With Your Visa

 | Feb 06, 2018 | 9:47 AM EST
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Stock quotes in this article:

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ma

Visa Inc. (V) was reviewed just a few days ago. In a matter of hours the chart has changed rapidly. The other day, I wrote, "With the stock price of Visa's competitor MasterCard (MA)  soaring today, we shouldn't get negative on V. I would suggest raising sell stop protection to a close below $114 from a close below $106." Let's revisit the charts.

In this daily bar chart of V, below, we can see how in two short days V declined to test the rising 50-day moving average line. Shorter moving averages or weighted moving averages would have been broken.

The rising 200-day line is below the market, and it would intersect around $105 now. The volume of trading increased to around 15-million shares -- heavy, but not extreme.

The On-Balance-Volume (OBV) line was rising right up until Friday. The trend-following Moving Average Convergence Divergence (MACD) oscillator quickly crossed to the downside for a take profits sell signal. An outright sell signal (the way I use this indicator) does not come until the oscillator crosses below the zero line.

In this weekly bar chart of V, below, the only indicator now showing weakness is the MACD oscillator, which is poised for a bearish crossover.

In this Point and Figure chart of V, below, prices are in a down column of "Os". There is some potential support form the consolidation in the $113-$107 area.

Bottom line -- traders should probably keep the stop on a close below $114 (see the first paragraph above) because discipline is a good habit to practice. A close below $107 could open the way to further weakness.

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